The American brokerage firm Compass announced yesterday afternoon that it has submitted a draft registration form with the Securities and Exchange Commission, the first step towards its long-rumoured IPO which is now “expected to take place after the SEC completes its review process, subject to market and other conditions.”
While the intention to take the brokerage goliath public may not have been a surprise, the straight IPO method Compass looks to be using to do so has upset the predictions of some industry commentators who had thought that the New York-headquartered company might become the latest firm to go public via the increasingly popular special purpose acquisition company (SPAC) route.
Compass is backed by SoftBank's Vision Fund along with two other US companies which have recently taken their firms public via SPACs and in doing so, made their backers billions of dollars and even recouped a large part of the loss made to date on WeWork. Both the ibuyer OpenDoor and the food delivery company DoorDash went public over the last 12 months via SPACs already listed on the stock exchange, a route that Zillow co-founder Spencer Rascoff has been evangelising about as a faster way to go public that doesn't leave money on the table.
As for a potential valuation of Compass's business, the firm was valued at $6.4 billion when it raised $370 million from venture firms back in July on 2019 and like many brokerages it has benefitted from a booming domestic property market. With virtual brokerage firm eXp having seen massive growth in its share price over the course of 2020 and other publicly traded brokerage shares such as RE/MAX, Realogy and Redfin all having seen steady growth in price since the worst of the pandemic, Compass will be optimistic about delivering value for its future shareholders.