Deezer: “The choice of Euronext makes sense” (Christopher Dembik, Saxo Bank)

by bold-lichterman

Deezer has lifted the veil on its IPO project on the regulated market of Euronext Paris. The entry on the stock market of the French must come to consolidate the activity, while the battle against competitors Spotify and Apple is tough. The start of trading has been set for October 30. Deezer is the very first streaming site to go public.

In detail, the indicative range of Deezer shares will be at an opening price set between 36.20 and 49.24 euros, the press release said. The company, founded in 2007, intends to raise 300 million euros spread over 8.2 million shares. Deezer also announces an over-allotment option linked to the sale of existing securities, in the amount of 1.2 million shares. The ceding shareholders are DC Music Sarl, Idinvest Partners, CM-CIC Capital Privé, Mr. Daniel Marhely (the co-founder), Thomas Erhel and Xavier Niel.

Financing growth

Deezer’s largest shareholder to date is businessman Len Blavatnik of Access Industries, with 27% stake in the group. The labels Warner Music, Sony Music, EMI and Universal Music VIV.PA own 15% of the shares of Deezer and Orange 10%, continues Reuters.

“The IPO will allow us to accelerate our growth and continue to play a major role at the forefront of the music revolution that is opening up with streaming,” says Hans-Holger Albrecht, CEO of Deezer . The closing of the open price offer is scheduled for October 26.

With 6.3 million subscribers worldwide, Deezer is still far behind the 20 million subscribers of Swedish Spotify. Most of its subscribers also come from agreements made with telecom operators. In 2014, the company recorded more than 27 million losses, prioritizing its growth and investment, rather than profitability. Deezer is present in 180 countries.

Christopher Dembik, analyst at Saxo Bank
Christopher Dembik, analyst at Saxo Bank

We can consider that Deezer could have raised twice as much by entering the United States. This is a minimum estimate that also takes into account the fact that US investors are more cautious this year when it comes to IPOs than in 2014. The macroeconomic environment and uncertainties about policy monetary pressure on the new technology market.

From my point of view, the choice of Euronext makes sense because Deezer is mainly present on the French market with nearly 15 million customers.

This proves that the efforts made by France and by Euronext to attract companies in the digital and Internet sectors are starting to pay off. The recently launched Tech40 comes under this device.

Obviously, the question of the enthusiasm for Deezer of French investors, traditionally more inclined to focus on large industrial stocks, will arise. It’s a problem, but we can be confident about the future. Investors are more and more receptive to the values ​​of the new economy, they better understand the business model and the risks inherent in such investments.

Read also: 7 revealing figures about Deezer’s strengths and weaknesses

Creation: 2007

Headquarters: Paris

Workforce in April 2015: around 400 people around the world, spread over 19 countries

Name of recruitments planned for 2015: around 100 recruitments, including 70 technical positions