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Friday, March 28, 2014

Report: Spotify Could Be Going Public

The popular music-streaming company has participated in informal chats with some of the investment banks likely to fight for a role in a potential IPO, sources familiar with the process said. According to qz.com, he six-year-old service may start holding formal meetings as early as next month in anticipation of an offering in autumn.

QZ reports Spotify has taken a couple steps recently that are in keeping with a company preparing for a public offering. It acquired the company behind the algorithms Spotify uses to power its personalized radio service. It also obtained a $200 million credit line from lenders, among them Morgan Stanley, Deutsche Bank and Goldman Sachs earlier this month.  These so-called credit facilities are the equivalent of credit cards in the corporate world. Lenders are usually eager to extend credit lines to hot privately-held tech companies at attractive terms, if they think it will give them an advantage in snagging future business—not least of all the lucrative business of handling an IPO.

Launched in 2008 by Swedish entrepreneurs Daniel Ek and Martin Lorentzon, Spotify has become one of the fastest-growing music streaming businesses, challenging more established rivals like Oakland, California-based Pandora (which was founded in 2000 and went public three years ago).

Bankers following Spotify say the company may be attractive to prospective investors because the bulk of Spotify’s earnings come from subscriptions rather than advertising.

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