The Business Times

Snap IPO draws Barclays CEO, but UK investors remain wary

Published Tue, Feb 21, 2017 · 10:10 AM

[LONDON] A full team of Snap Inc executives, advisers, and the Chief Executive Officer of Barclays Plc attempted to sell the story of the social media company's IPO in London Monday. So far it has been a tough sell.

Snap CEO Evan Spiegel and fellow executives faced questions from investors about declining user engagement, according to fund managers present at the meeting who did not want to be identified as the discussions were private.

Questions about ownership structure were also voiced by investors. Snap is listing non-voting shares, the first business to do that in the US, according to the company's deal filing, giving stockholders no sway over aspects such as director nominations and executive compensation.

Proceedings were housed in a conference center in the heart of London's financial district at 155 Bishopsgate, a few paces from Liverpool Street Station, decked out with Snapchat's yellow branding. Inside, Spiegel, co-founder and Chief Technology Officer Bobby Murphy, and chief strategy officer Imran Khan pitched the future of Snap to around 70 fund managers and analysts. The presentation was introduced by Barclays CEO Jes Staley in an effort to woo local investors. Barclays is one of a slew of firms underwriting the deal, along with lead bankers Morgan Stanley and Goldman Sachs Group Inc. Morgan Stanley's head of technology banking and the lead banker on the deal, Michael Grimes, was also busy helping push Snap's pitch to investors, according to a person familiar with the meeting.

But in the Q&A and a series of smaller meetings with Snap executives, investors focused their questioning on user growth, a sign that the slowdown is a serious issue in the minds of fund managers, as is competition from rivals such as Facebook Inc.

By the fourth quarter, average daily active user growth fell below 50 per cent in those three months for the first time since at least 2014, according to Snap's deal prospectus.

Facebook's Instagram, a major rival platform, launched its Stories feature in August, and now has 150 million people using its version of stories. WhatsApp, the chat application also owned by Facebook, is also rolling out similar features to Snapchat.

A Snap spokesman in London declined to comment on this story. Snap executives Monday put the slowdown in users down to issues with its development on Android, a problem it flagged in its prospectus.

In response to questions about ownership, Snap replied that investors not having a vote was not the same as not having a voice, and that they will still listen to shareholders.

Despite the questions on user growth, fund managers were impressed with Snap's willingness to make the trip to London. Neither Facebook or Twitter Inc offered European investors the chance to meet the management teams before listing.

"I actually hope they are successful," said Ali Unwin, a fund manager at London-based Neptune Investment Management Ltd.

"There are plenty of interesting private tech companies in the IPO pipeline and a botched flagship IPO doesn't help them get to market."

Snap's IPO, the first for a social media company since Twitter more than three years ago, is expected March 1, according to terms reviewed by Bloomberg. Snap set the valuation between US$19.5 billion and US$22.2 billion.

The roadshow heads back to Manhattan on Feb 21, with Snap no doubt facing similar questions from potential investors over a group lunch at the Mandarin Oriental.



BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to



Get the latest coverage and full access to all BT premium content.


Browse corporate subscription here