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Dropbox is said to file confidentially for initial offering

[NEW YORK] Dropbox, the file-sharing private company valued at US$10 billion, has filed confidentially for a US initial public offering, people familiar with the matter said.

Goldman Sachs Group and JPMorgan Chase & Co will lead the potential listing, according to the people, who asked not to be identified because the filing wasn't public. Dropbox is talking to other banks this month to fill additional roles on the IPO, the people said. The company is aiming to list in the first half of this year, one of the people said.

Representatives for Dropbox, Goldman Sachs and JPMorgan declined to comment.

A share sale by San Francisco-based Dropbox, one of a closely watched group of high-profile private tech companies with multibillion-dollar valuations, would follow Snap's disappointing step into the public markets. How the stock fares post-listing will be an ongoing focus for both Wall Street and the tech community. Snap shares are down 15 per cent from its IPO last March.

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Unlike money-losing Snap, Dropbox will come to the table with annualised sales of more than US$1 billion, chief executive officer Drew Houston said in an interview last year. It's also been profitable, excluding interest, taxes, depreciation and amortisation. Those benchmarks are the product of more than two years of focusing the company, expanding its product suite for businesses and reining in expenses, Houston said at the time.

ADT, Spotify Dropbox could be one of the biggest US enterprise technology companies to list domestically in recent years. First Data Corp went public at a market value of about US$14 billion in 2015 - the biggest such IPO in the past five years.

Dropbox joins a growing list of large tech companies preparing to go public in the US early this year. Apollo Global Management LLC's security company ADT is aiming to raise as much as US$2.1 billion in an IPO expected to price on Jan 18. Spotify, owner of the world's largest paid music service, plans to execute its unconventional direct listing this quarter, a person familiar with the matter said this month.

Non-public filings have become more common since July, when the US Securities and Exchange Commission began allowing all companies to file early IPO documents confidentially - a perk previously reserved for smaller businesses.

Dropbox achieved its US$10 billion private valuation in its last private funding round in 2014. While it's uncertain whether the company will be able to initially sell shares above that valuation, the stock could trade higher once it's public, the people said.

Cloud Pitch

As of August, Dropbox had 500 million users, including 200,000 businesses, storing and sharing files online through its cloud service. The service lets companies keep documents in a commonly accessible place without having to build their own server farms. The company will have to show potential investors how it's differentiating its core file-sharing products and newer collaboration tools from the likes of Google, Microsoft and Box.

Dropbox is likely to tout its biggest investment in recent years: its own cloud. It's spent hundreds of millions of dollars to build data centers and mostly wean itself off of Amazon.com's servers, a rare feat for a software business with hundreds of millions of users. That's made it easier for Dropbox to cut costs while speeding file transfers, chief operating officer Dennis Woodside said in an interview last year.

The two lead banks have a history of working with Dropbox. Goldman Sachs advised the company on earlier funding rounds and extended the company credit, while JPMorgan led a US$600 million credit line to Dropbox last year, the people said.

Taking on the risk of lending to a private company can typically help a firm's chances in underwriting an eventual IPO. JPMorgan led a credit line extended to Dropbox, along with Goldman Sachs, Bank of America, Deutsche Bank, Macquarie Group and Royal Bank of Canada, people familiar with the matter said last March.

Goldman Sachs had been helping the company prepare IPO documents.

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