Warner Music Group proceeds with IPO, eyes $13.3B valuation

The world’s third-largest record company has confirmed plans to push ahead with its initial public offering, which could value Warner Music Group at US$13.3 billion.

The New York-based company’s flotation on the Nasdaq stock exchange is said to be worth US$1 billion – one of the largest of the year – although it has declined to comment on this.

Its owner Access Industries, which paid $3.3 billion for it in 2011, is making available 70 million shares of Class A common stock.

Warner Music’s multi-billionaire founder, Len Blavatnik, made his fortune in Russian oil before entering the music and entertainment industry.

A successful IPO will translate the value of the 70 million shares, at between $23.00 and $26.00 each, to somewhere between $1.61 billion and $1.82 billion.

Warner Music’s main pitch to investors is its superiority in technology and streaming, and how it had adapted “to move faster than other” major music entertainment company.

Earlier this month, the company announced in the quarter ending March 31, streaming revenue for recorded music grew 11% and 17% for its publishing division.

Warner Music’s overall revenue in the quarter was $1.25 billion.

Another attraction to investors is the number of major acts on its roster, including Ed Sheeran, Bruno Mars, Cardi B, Katy Perry and Lizzo.

It’s various label imprints carry currency too, including Parlophone, Atlantic and Elektra.

However, that Access Industries will retain main voting control would be off-putting to some major investors who prefer totally free shareholdings.

Warner Music’s IPO ends any speculation that Access Industries was looking at selling the music company to Saudi-controlled Public Investment Fund for around $12.5 billion.

Warner has an estimated 18—20% share of the global music market, and follows on from last year’s IPO by Universal Music Group, which is said to have a 31% global share.

Investors say the music industry’s growth could see other companies also eye the market.

Universal is valued at $33 billion after its 10% sale to a Tencent-led consortium for $3.3 billion, with Tencent able to purchase another 10% in January.

Vivaldi-owned Universal has indicated that an IPO within the next three years, for a further 10% of its stock, is a possibility.