Tue, Mar 13, 2018 - Page 10 News List

Spotify may list in NY in April

UNCONVENTIONAL:The company will not issue new shares or raise money from the IPO, as existing shareholders will offer their shares to investors

Bloomberg

Spotify Technology SA plans to list on the New York Stock Exchange the week of April 2, people with knowledge of the matter said, giving the company weeks to prepare for an unconventional debut.

Spotify will deviate from decades of practice by not issuing any new shares or raising money in its initial public offering (IPO). Instead, existing stakeholders will offer their shares to investors, which is known as a direct listing.

An active market for private stock sales over the past couple of years has helped the company establish a valuation higher than US$20 billion, based on some of the transactions.

Spotify is to spend the next few weeks meeting with investors to manage the uncertainty inherent in this approach, hoping to secure a smooth entry into the world’s largest stock exchange.

Banks typically help companies set a price range where a stock will debut to ensure that its value does no plummet on day one.

A representative for the streaming service declined to comment.

Spotify will host an investor day on Thursday to tout the prospects of a company that has helped transform the music business. Industry sales have grown three years in a row thanks to paid streaming services.

Spotify is the undisputed leader of the market. It had 71 million subscribers as of the end of last year, about double its closest competitor, Apple Music.

However, it still has to prove offering music online is a good business. While company sales climbed to 4.09 billion euros (US$5 billion) last year, losses widened.

Spotify pays out more than 70 percent of revenue to the music business, and the cost of royalty payments to record labels and publishers has prevented one rival that got an earlier start, Pandora Media Inc, from turning a consistent profit.

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