It seemed like an unequivocal stance to take. Back in 2013, Palantir’s chief executive Alex Karp said a public listing would make “running a company like ours very difficult”.

The head of the secretive government contractor, a specialist in crunching data to help catch criminals, terrorists, track down illegal immigrants and a host of other activities,  was convinced that the scrutiny required of a public company was the last thing Palantir needed.

After all, the firm’s clients include the CIA, the FBI, and the NSA. These are not organisations which usually crave a high public profile and they often prefer the discretion involved with dealing with a privately-held business.

Yet seven years on, Karp and his fellow co-founder Peter Thiel are on the brink of clinching one of the biggest public share offerings of 2020. It is expected to value Palantir at close to $16bn.

At its heart, Palantir is a data-mining company with two main software products, known as Gotham and Foundry. These allow customers – often government agencies – to find and analyse trends in big data sets. For example, the NHS used them during the pandemic to direct resources like ventilators to where they were needed most.

But Palantir’s technology has attracted controversy too. Another customer has been America’s Immigration and Customs Enforcement (ICE) service, which uses its services to help find and deport illegal immigrants. 

Like other technology firms, Palantir is opting for a direct public offering, or DPO. This differs from the more traditional initial public offering in that no new shares will be issued. Instead, it gives the founders and existing shareholders the chance to flog some of their stake in the company.

Nonetheless, its newfound obligations that come with being a public company should ensure much more transparency in what has been  a notoriously opaque business.

Between them, co-founders Thiel, Karp, and Stephen Cohen own just under a third of the company’s shares. Despite their limited ownership, the structure of the listing will ensure they retain control for some time.

Palantir will have three different classes of shares in a complicated set up that will ensure the founders keep half of the voting rights regardless of who sells what.

“The result is that until all of the founders have died, the remaining founders will have complete control of this company and other shareholders will have none,” says Richard Windsor, founder of research group RadioFreeMobile.

“This practice is common in small start-ups where speed and the ability to quickly pivot can be critical, but I have long believed it has no place in large public companies into which anyone can invest.”

Windsor explains that for a start-up with limited funds, waiting around for an investor can kill the company.

But Palantir is no struggling start-up. The data mining firm has been around for 17 years.

Whether or not investors are drawn to the company, despite its unusual share structure, and the listing is deemed a success could turn out to be a key litmus test of the appetite for big ticket technology deals. 

Although Palantir remains unprofitable, it still claws in hundreds of millions of dollars in revenues from state contracts, including one recent deal to help manage the NHS’s data store.

Palantir is expected to be valued at around $15.7bn, according to the share price guidance given in its S-1 document. For some, that valuation remains too high.

“In Palantir’s case, I would apply at least a full 30pc discount to compensate investors for the added risk they are taking by owning these shares,” Windsor says of the weighted share structure.

Thiel will undoubtedly be pleased to keep control of the firm having been involved since day one. The 52-year old enigmatic founder was among the minds behind PayPal. He was also the first professional investor to pump money into a little-known social media site called Facebook. Thiel was also among US president Donald Trump’s biggest Silicon Valley advocates in the run-up to the 2016 election. It was reported that he had decided to sit out campaigning this year as he felt the president was unlikely to win re-election.

Despite the controversial ownership scheme, Palantir’s financials are improving. Its intention to list documents reveal how revenue had jumped by a quarter last year to $742m.

It also enjoyed a strong opening half of the year with sales rising to $481m in the six months to the end of June. The business also recorded a modest $17.2m profit for the period, up from the $167m loss in the same period last year. Palantir is widely tipped to exceed $1.5bn in revenues next year.

One of the draws for Palantir to public life is undoubtedly private clients. The company claims that its addressable market is $119bn.

Convincing clients to sign up will be easier when you can point to a healthy and public set of corporate books.

Where once life in the public markets was the last desire of the firm’s chief executive, it now appears to be a key element of Palantir’s future.

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