Simpson Thacher represented Lyft, Inc. (“Lyft”) as 1940 Act counsel in connection with its initial public offering of Class A common stock on the Nasdaq Global Select Market. Lyft, a ride-hailing technology company, was valued at $24.3 billion.
The Firm advised Lyft with respect to the 1940 Act matters, including in obtaining a notice of an intent on the part of the SEC to grant an order affirmatively declaring that Lyft is not an investment company, as that term is defined in the 1940 Act. The cash-heavy and asset-lite nature of Lyft’s business left uncertainty about whether it should technically be subject to regulation under the 1940 Act. The SEC has the power to issue orders that authoritatively declares that a company is not an investment company, but the issuance of such orders has been rare in recent years. Lyft is not unique in its difficulties with the 1940 Act, and several well-known public companies have applied for similar relief without success.
In providing notice of its intent to grant Lyft’s order, the SEC has effectively determined that Lyft may manage its cash position and the proceeds from its IPO as it sees fit without worry that it may inadvertently become an investment company. The final order is expected to be issued in April 2019.
The Simpson Thacher team included Rajib Chanda and Nicholas Ridley (Registered Funds); and Josh Bonnie, Kevin Kennedy, Lesley Peng and Will Golden (Capital Markets).