Listing itself on the Oslo Stock Exchange, Norwegian video-hosting platform Pexip has sparked a stir by hosting a virtual IPO.

The video conferencing platform Pexip was listed on the Oslo Stock Exchange on the 14th of May 2020. In present circumstances within international commerce, such a move could be considered daring. Businesses in all shapes and sizes have adopted risk-averse policies to withstand unpredictable market conditions emergent from quarantine measures, travel restrictions, and an influx of labour regulation that turns logistical strategy into a nightmare. Hosting an IPO in unprecedented market conditions is plausibly bold. Looking back one month later, was it worth it?

Contrary to initial uncertainty, Pexip’s unexpected move to host an IPO in present circumstances appears to have been a success. Of course, this was no ordinary IPO. Contrary to the expensive hotel lobbies and pretty city backdrops that have come to be expected from IPOs, Pexip decided to host a significant proportion of the IPO (over 95% of relevant proceedings) virtually through leveraging their USP of secure video conferencing. Although the loss of physical interpersonal interactions relied upon by potential investors may initially raise doubts as to the plausibility of virtual IPOs, the lack of physicality appears to have worked to the benefit of Pexip.

Commenting on virtual IPOs, CEO of Pexip Odd Sverre Østlie made clear the substantial reduction in costs a virtual IPO can entail. He commented ‘our calculations show that we saved over 1700 hours – more than 70 days – of travel time alone’. Coupling transportation costs along with renting expensive venues usually hired to make good impressions, the virtual edge of the IPO appears to have cut costs significantly in establishing more positive cashflow for Pexip. An environmental angle unearths a reduction in carbon emissions through the absence of travel requirements emergent from virtual IPOs. Furthermore, the timing of the IPO also seems to have worked in favour for Pexip. In a time where remote working has become normalised, listing a service predicated on remote working on the Oslo Stock Exchange directly addressed the present demand for agile working.

The success of Pexip’s IPO also raises questions about the service forming a competitor to market giant Zoom. The service has secured transatlantic investment from American giant Capital Group as well as investments closer to home from DNB Asset Management, a Norwegian company, and Swedish based TIN Fonder amongst other investors. A key USP of Pexip is that the service allows businesses to host the software on their own. As market giant Zoom faces increasing scepticism over its security policies, Pexip is keen to plug the hole in privacy concerns by allowing businesses greater control over how the software is used (by primarily allowing self-hosted conferences). The service has found success in Irish courts that self-host Pexip’s software and accordingly allots greater responsibility for security to court infrastructure rather than allowing Pexip to take the reins on security.

With companies tuning into the cost-saving benefits of remote working, it appears that Pexip has plugged a hole in the market with its favoured security measures which allow companies greater control of how their data is stored. A virtual IPO is seemingly a cherry atop the icing of cost-reduction in an increasingly digitised marketplace.

by Brighton Dube

Virtual IPOs – A New Normal?