Warner Music Group has launched its initial public offering (IPO) on Wall Street. WMG is being listed by its parent company Access Industries at expected price $23-26. It would float 70 million shares, or 13.7% of its common stock, valuing the company’s equity from $11.7 billion to $13.3 billion.
The listing, planned for Nasdaq, would be a dramatic turn in fortune for the music company that was bought by Access Industries in 2011 for $3.3 Billion. Access Industries is owned by Len Blavatnik, a Ukrainian billionaire who made his fortune in the wild 1990's in Russia with ties to the Russian government and has been weirdly tied into the 2016 Russia election probe.
According to the prospectus, Morgan Stanley, Credit Suisse and Goldman Sachs are the chief underwriters. BofA Securities, Citgroup and JP Morgan are acting as joint bookrunners. Another 23 banks are acting as co-managers. Underwriters will have a 30-day option to purchase up to an additional 10,500,000 shares of Class A common stock from the selling stockholders, the company said.
Access Industries LLC is selling the shares and Warner Music will not receive any of the proceeds from the IPO. A successful IPO of 70 million shares could net between $1.61 billion and $1.82 billion, but the label would see none of it.
In the filing, Access will remain a “controlling company,” which means that it will control a majority of the total combined voting power of the firm’s outstanding common stock according to Music Business Worldwide.
The IPO was delayed because of COVID-19, but the company is still going ahead despite the headwinds against the music industry. The company says that they are still poised to be financially stable and grow in the future.
“Digital revenue is among our highest margin revenue while some of the revenue sources that have been negatively impacted by the economic effects of the pandemic, such as artist services and physical, are intrinsically lower margin," the company noted via Billboard.
Ad spending is down and this has hurt licensing, though streaming continues to grow year-on-year. For its last fiscal year, which ended in September, Warner Music had $4.5 billion in revenue, according to its prospectus. That was up from $3 billion in 2015.