Daily Management Review

Deezer is Planning IPO


The French music streaming service Deezer announced plans for IPO on the Paris stock exchange before the end of the year in order to attract investment to deal with Apple and Swedish service Spotify, according to The Wall Street Journal.

On Tuesday, the company said that the preparation for entering the stock market will start immediately after the approval of the French authorities. Analysts believe that the company could be valued at about 1 billion euros ($ 1.12 billion).

Deezer’s CEO Hans-Holger Albrecht was not specific about how much the company plans to raise in the IPO, adding that he plans to issue new shares as existing shareholders do not plan to sell their shares.

The company plans to invest funds raised in the IPO in the development of its sales network and increase market share of the streaming services.

Deezer has attracted nearly $ 150 million investment since its inception. Access Industries, the foundation of Leonard Blavatnik, was one of the largest investors in the French service: in 2012, he invested in Deezer 100 million euros together with the French fund Idinvest Partners.

Access Industries currently owns 27% of share capital, being the largest shareholder of Deezer. Also, there are other major companies among the shareholders - the French telecommunications operator Orange with a share of about 11%, and music labels Warner Music, Sony Music and Universal Music, which in total will own nearly 15%.

Founded in 2007 in Paris, the company has 6.3 million subscribers and a catalog of 35 million songs for a monthly fee of 9.99 euros ($ 11.18). Deezer is represented in 180 countries, but still the bulk of its customers accounts for France, where it is supported by Orange.

In comparison, competing resource Spotify claims that it has got 20 million paying subscribers. Loss of Swedish service for the past year amounted to 162 million euro, revenues - 1.08 billion. Both companies are now facing the new strong player - Apple, which recently launched streaming audio service Apple Music.

According to financial disclosure before the IPO, Deezer's revenue in the first half of 2015 compared to the same period in 2014 increased by 41% to 93.2 million euros. The loss of service was reduced relative to the first half of last year by 30% to 8.97 million euros. CEO predicts that by 2018, revenues will exceed 750 million euros against 142 million euros in 2014, what will allow going into profit.

source: wsj.com