The Denis Ladegaillerie-led consortium that orchestrated an “amicable buyback” of Believe shares has announced that an “overwhelming” majority of shareholders have “decided to tender their shares to the offer”.
The buyback - first proposed in February - allowed investors in the publicly listed company to sell their stock to Upbeat Bidco at €15 per share. Upbeat BidCo is the vehicle created by Ladegaillerie and his private equity partners to implement the takeover, which now, after the offer to shareholders closed on 21 Jun, controls 94.99% of Believe’s shares and “at least” 94.29% of voting rights.
While this gives Upbeat more than enough clout to institute a ‘squeeze-out’ of the remaining 5.01% of shareholders - who between them own 5,044,680 shares - the company clarified earlier this month that it would not implement a mandatory squeeze-out.
This means that the small minority of shareholders who decided to stick with Believe will be able to maintain their stake in the company. However, now that the free float - or tradable shares - of the company has fallen below 15% of the share capital, this fact “should lead to Believe’s shares soon being removed from certain stock market indices”.
As a result, those minority shareholders are likely to be individuals and funds that have a positive long term view on the value of Believe, as once shares are removed from the listed markets they will have limited liquidity should they want to sell those shares.
Between them - and at the offer price - those shares had a combined value of just north of €75 million representing a substantial amount of money still tied up in Believe as it enters its new era.
Part of that new era sees the exit of Ventech from the Believe board. Ventech was one of Believe’s earliest investors and has now divested itself of its entire 12% stake in the company, resulting in a total return of €175 million.
Ventech was one of Believe’s earliest investors, leading on the company’s €4 million Series A back in September 2008, with a presence on Believe’s board throughout its tenure. The exit represents “a remarkable exit” for the Paris-based VC, bringing it a 36x multiple on its investment, and the crown of “France’s biggest VC exit in a decade”.
In an announcement on Ventech’s website, founding partner Alain Caffi said “We are proud to have supported Denis Ladegaillerie, the visionary founder of Believe, from the old days where Believe had €2 million in revenue all the way to today. At a time when the music industry had just gone through fifteen years of crisis, we were convinced by Denis’s vision. We are pleased to see that Believe is now in the capable hands of TCV, one of our longstanding partners, and EQT with whom we share the values cherished by Believe: Respect, Expertise, Fairness and Transparency”.
In a blog post, Caffi went into more detail on the ingredients for Believe’s success, and Ventech’s successful return.
“A success story requires three basic ingredients”, he writes. “Vision of a technology and/or usage disruption; execution capability; company values”, going on to say, “We were convinced that Believe had these ingredients. Denis shared his vision of reconstructing the music industry from creation to distribution through the digital revolution. This transformation would shift music focus from a few heavily marketed artists by majors like Universal, Sony, or Warner to numerous talents emerging often outside traditional networks, primarily through social media and concerts”.
Commenting on today’s announcement, Ladegaillerie says, “With enhanced financial agility and the proven expertise of the consortium members, the group is now best equipped to achieve our collective goal: to make Believe the global leader in independent music, serving artists and labels worldwide”.
With the exit of Ventech from Believe, and “aligned with the new shareholding structure”, the company has co-opted a new director to its board in the shape of Andrew Fisher, representing EQT X. While Fisher’s appointment is still subject to ratification by the company’s shareholders - which will take place at an AGM in 2025 - given Upbeat’s near-absolute control of the company, this is just a technicality.
Fisher, an alumnus of Loughborough University, is currently chair of Epidemic Sound, the Stockholm-based production music company, and Rightmove, the UK’s biggest property listings website. However, his most notable role in music was his thirteen year stint as CEO and then executive chair of pioneering music recognition company Shazam, which he left in October 2018, shortly after the sale of the company to Apple in a deal reportedly worth £300 million.
Awarded the OBE for services to the digital economy in 2016, Fisher says that he is “especially focused on creating shareholder value through innovative new products and services that capture the global opportunities associated with rapidly changing consumer behaviour”.
With significant interest across the music industry - and in particular within the major labels - on the “superfan” opportunity, as well as the challenges and opportunities presented by shifting consumption and formats driven by innovation, Fisher’s appointment may give an indication of Believe’s focus in coming years.