AMSTERDAM Reuters - Universal Music Group shares leapt more than a third in their share market debut on Tuesday as investors bet a boom in music streaming still has a long way to run.
Here are facts about Universal and its flotation:
By revenue UMG or Universal Music Group is the largest of three record labels. It represents a huge range of musicians and song catalogues, from Billie Eilish to The Rolling Stones and Bob Dylan.
Major rivals include Sony Music, a part of Sony, and Warner Music Group. The big three are estimated to account for just under 60% of global sales generated by music rights from their catalogues.
In the early 1930's, Universal started out when British label Decca Records set up a U.S. branch that later merged with other music companies. In 2011, Universal swooped on recorded music business for $1.9 billion, giving Universal access to catalogues for The Beatles, Radiohead and Pink Floyd.
International is benefiting from a boom in streaming revenues, with young music fans in particular relying on their smartphones to listen to songs. It earns money from subscription services by likes of Spotify.
It also has deals with ad-based social media companies like TikTok and YouTube to compensate artists for the use of their songs in user-generated content on those platforms - although the terms of those deals are not public.
While Digital piracy cut into music sales in the first decade of the century, Universal is now pushing into areas such as social media platforms that use its music, such as TikTok, as well as fitness applications and video games.
Despite the competition from independent labels and startups looking to release music in purely digital fashion, Universal still faces competition from independent label suppliers and startups. The company says in its listing prospectus that it expected to grow its streaming business in markets such as South Korea, Brazil, India and Russia.
Universal was spun off by French media group Vivendi. Vivendi's shareholders, including its controlling shareholder Vincent Bollore, received 60% of the shares of Universal after it listed in Amsterdam.
On Tuesday, Universal saw its market value rise to almost 47 billion dollars of Europe's largest listed for the year.
Vivendi will hold 10% of Universal after the transaction. A consortium led by China's Tencent will hold 20% and billionaire investor William Ackman's Pershing Square Holdings will hold 10%.
Bollore and Tencent have agreed to consult each other on matters such as dividend policy and some aspects of the board before general meetings, Universal said in its prospectus.
Universal reported earnings before interest, taxes, depreciation and amortization EBITDA of 1.49 billion euros on sales of 7.43 billion euros in 2020. For the mid-term, Universal forecasts sales growth in the high single digits, with an EBITDA margin in the mid 20/20 range.