The skies over the markets promise storms. But analysts are confident nonetheless: the music will overcome the bricks Evergrande Chinese.
This morning, the most important one made its debut on the Amsterdam Stock Exchange European IPO of the Year: UMG's stock offering, which stands for Universal Music Group, a colossus which, among other things, represents more than 2 artists all over the world. The group has recorded a 35% jump with a capitalization of more than 45 billion at the end of the morning.
The offer took place at price of 18,50 euro per share which are equivalent to a stock market valuation of 33 billion euros, lsame paid by new members who have joined in recent months. But analysts are betting that when a large part of the shares, 60%, is sold by Vivendi to its shareholders, the share, under the pressure of the prospect of a strong growth in Ebitda and an overwhelming growth in profits (+20% down later this year) will take off. According to JP Morgan the capitalization of the multinational which controls approx 40% of the world market is destined to rise up to 54 billion euros to the delight of old and new shareholders, and in particular of Vincent Bolloré who will immediately pocket the beauty of 5,9 billion euros, a treasure trove that will certainly not remain idle. The Breton financier, even before the IPO, has already launched into conquest of the Lagardère media empire, securing control with approximately 700 million paid to Amber, pending the takeover bid to conquer the parent company of Canal Plus.
Ma the scene today is all about Universal, one of the three sisters who control the world music market, resurrected after the various crises linked to the end of vinyl records first, then of CDs and one step away from extinction under the pressure of piracy, limited, if not defeated, by streaming deals and from the all-out exploitation of the music scene, from concerts to artists' rights. To the point that Bolloré has found himself, thanks to the ability of a genius in the sector, the pdg Lucian Grainge, discoverer of rock and pop talents, a sort of goose that lays golden eggs which he has in his catalog Paul McCartney, the Rolling Stones but also Eminem or Selena Gomez, Lady Gaga and Taylor Swift ranging from hard rock to Latin music that monopolizes, including advertising, the Hispanic broadcasters of South America but also of El Paso, Los Angeles, Miami or the Puerto Rican neighborhoods of the Big Apple . It was he who led the creation of winning alliances with US radio and Spotify, Amazon and Apple Music.
And so the owner of Vivendi, at the time distracted by the fruitless war for the conquest of Mediaset, found a mine in his hands to exploit with a colorful company made up of Chinese Internet giant Tencent which he sold 20%, retaining an 18% stake for himself and selling to the US assault financier Bill Ackman another 10%. The rest, after the vain protest of an American hedge fund company, will end up in the pockets of the shareholders. Except for the hard core which, thanks to a participation of 10% still in the hands of Vivendi, he will guide the first steps of the newborn public company which can now boast the title of deal of the century: in 2014, in fact, the entire Universal was worth 7 billion euros, more or less a fifth of the current valuation. And it will not be surprising, at this point, if some revelers greet the first closing by singing "Money, money" by Abba.
The listing prospectus (306 pages) offers more than one reason to understand the appreciation of the markets: in 2020, the year of the pandemic, turnover grew by 3,8% but the previous year the leap had been 18,8%. And this year, regardless of the variant, the desire for music has regained positions, waiting to repopulate the squares once and for all. With or without a mask. Among the reasons for the success is the ability to follow tastes of all kinds, local and/or global. In the catalog there are Chinese and Korean, Indian and Nigerian stars or the sound of South Africa. Half of the artists work in the USA, 30% in Europe, 14% in Asia. The risks? Technology, the top management complains in the prospectus, does not yet offer us the tools to capture the public's orientations in a short time, just as it is not easy to predict the next technological evolution of a constantly evolving sector: streaming today represents 62% (equal to 3,9 XNUMX billion in turnover) "but it is not clear whether the growth will be sufficient to compensate for the decline in CDs and other technologies".
Achilles' heel is the platform dependency, from Spotify to Deezer which, with the sound of logarithms, can decide the fortune or misfortune of a star. And then there's the competition of a new kind: self-managing authors or, like the case of Bob Dylan, sell their catalog at copyright prices. And what about the private equity firms looking to launch new entries and new trends?
It's not an easy job for Lucien Grainge or the other very few gurus on the market, able to choose the latest revelation of K-pop or the heir to Despacito, the hit that, for the first time, has taken the lead in the hit parade Use a song in a language other than English. The latest threat evoked by the prospectus is the arrival of the robots: it is not excluded that the heirs of rock will be selected by artificial intelligence. And maybe they'll perform at Bit's. But in the meantime Universal, the only one of the sisters of the seven notes listed on the Stock Exchange without being part (like Sony) of a larger and less focused reality is about to make money. So much for the Chinese brick.
