French music streaming company Deezer plans to go public by merging with a Spac backed by the investment group of billionaire François Pinault and investment banker Matthieu Pigasse.
The deal values the streaming service at 1.05 billion euros and comes as music companies such as Spotify and Universal have tried to capitalize on the streaming music boom with public offerings in recent years.
Deezer is merging with I2PO, a Paris-listed ad hoc acquisition company sponsored by several French banking and media personalities.
The French billionaire Pinault family has backed the company with a blank check through its investment arm Artemis, alongside Iris Knobloch, director of Lazard and former president of WarnerMedia in France and Germany, and Pigasse, head of of Centerview Partners in France.
François-Henri Pinault, son of French billionaire François Pinault and founder of the luxury group Kering, represents the family on the board of directors. A punk rock enthusiast and co-owner of Le Monde newspaper, Pigasse ran Lazard France before joining Centerview in 2020.
The Spac deal raised 135 million euros in the form of Pipe financing and a non-repayment agreement, in which investors agree not to withdraw their funds from the agreement, with existing Deezer investors, including Universal Music Group, Warner Music and Orange.
Investor appetite for Spac transactions has dried up significantly in recent months and blank check teams have been forced to soften the terms offered to investors to minimize the amount of withdrawals. Investors in blank check vehicles who don’t like the merger target can withdraw their funds, and the surge in withdrawals has led to several deals collapsing.
With 9.6 million paying subscribers compared to Spotify’s 180 million, Deezer is a small player in the music streaming market, where it competes with some of the biggest tech companies in the world. Last year, Deezer accounted for around 2% of global music streaming subscribers, compared to 31% for Spotify, 15% for Apple and 13% for Amazon, according to research group Midia.
Deezer in 2015 attempted to go public via an IPO, but abandoned the plans.
In 2015, streaming brought in $2.8 billion in revenue to the global recorded music industry, but that figure soared to $16.9 billion last year, according to trade group IFPI. . Last year, total recorded music revenue reached $25.9 billion, an 18% increase from 2020.
Some of the world’s newest music companies – including industry leader Universal Music – have also gone public in recent years as they seek to cash in on rising revenues.
Léonard Blavatnik, largely rewarded by betting on the revival of the music industry, should also benefit from the listing of Deezer, which he holds majority through his holding company, Access Industries. The billionaire bought Warner for $3.3 billion in 2011, and the company is now publicly traded at a valuation of $17.9 billion.