Spotify may delay its initial public offering (IPO) as it looks to raise USD 500 million in new investment, the Wall Street Journal reported, citing people familiar with the matter.
The music streaming service has hired Goldman Sachs to help with the new funding round, with investors hearing talk of valuations higher than USD 7 billion, the sources said. The company is talking with investors such as T. Rowe Price Group, as well as others. Spotify apparently said it would be willing to provide investors with “ratchet” provisions that give them a guaranteed return in the event of an IPO, one person said. Spotify declined to comment.
Vivendi’s Universal Music Group, Sony’s Sony Music Entertainment and Access Industries’ Warner Music Group together own just under 15 percent of Spotify.
Spotify was valued at USD 4 billion at a prior fundraising in 2013, according to data provider Dow Jones VentureSource. Private markets value the stock at around USD 6 billion. The 2013 fundraising round of USD 250 million was led by Technology Crossover. In 2012, it raised USD 100 million from investors including Goldman Sachs. Early investors include Kleiner Perkins Caufield & Byers and DST Global.
Spotify was valued at more than USD 5 billion in September, according to filings by GSV Capital, a private investment fund that owns the shares. Manhattan Ventures Partners forecast Spotify had 2014 revenue of USD 1.3 billion, and said the market’s fair value for the stock is about USD 5.7 billion, or 4.3 times its revenue.
