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Vivendi puts IPO back on the agenda for Universal Music
By Chris Cooke | Published on Friday 14 February 2020
Vivendi has announced that it will IPO its music division Universal. Despite having previously opted not to IPO its music division Universal. Maybe it saw the modest flutter of excitement that followed Warner Music’s IPO announcement last week and got jealous. Now it can have its own modest flutter.
French conglom Vivendi formally announced its intent to sell off some of the Universal Music Group in 2018, it being keen to cash in on the streaming boom. There was talk of an Initial Public Offering back then, but in the end Vivendi opted for a series of private deals with “strategic partners”.
The first of those deals was agreed at the end of last year with a consortium led by Chinese web giant Tencent. We knew talks were ongoing with other possible “strategic partners”. But it was in an investor update yesterday that it was announced that the plan to offload some stock via an IPO was back on the agenda.
The investor update began with some chatter about the Tencent deal, which will see that consortium take 10% of Universal now, with the option to take 10% more down the line. The update added: “This agreement will be shortly complemented by a second agreement allowing Tencent Music Entertainment to acquire a minority interest in the share capital of UMG’s subsidiary that houses its operations in Greater China”.
Then it said: “Vivendi’s Supervisory Board was informed of ongoing negotiations regarding the possible sale of additional minority interests”. And that: “Eight banks have been mandated by Vivendi to assist it in this matter”. Oh yes, and “an initial public offering is currently planned for early 2023 at the latest”.
So there you have it. But what’s changed since 2018? According to the FT, when asked that very question, Vivendi boss Arnaud de Puyfontaine said the market used to be “sceptical on the reliability of our business model in emerging markets”. The alliance with Tencent in China could help address such concerns. He went on: “Given the progress that we have made and the current situation we’re in, what was ruled out at the time now is obviously not anymore”.
Of course, since 2018, interest in music rights among the investment community has only risen, and the Tencent deal proved there was sufficient demand to value Universal Music at around $33 billion. All of which might have also helped motivate the change in plan.
