After a few months of slim pickings, the U.S. initial public offering market is expected to reopen with a bang this week with the biggest deal of the year expected to price later Tuesday…
Warner Music Group Corp. is returning to public markets after nine years as a private entity and is expected to raise up to $1.82 billion by selling 70 million shares priced at $23 to $26 each.
“It’s going to be the busiest week in quite a while,” said Kathleen Smith, principal at Renaissance Capital, a provider of institutional research and IPO-related exchange-traded funds.
Warner Music, one of three large companies that dominate the recorded-music industry, is the parent company for prominent record labels including Atlantic Records, Warner Records and Elektra Records, and mentions artists Ed Sheeran, Bruno Mars, Cardi B, Twenty One Pilots, Lizzo and Katy Perry in its filing.
In its most recently completed fiscal year, which ended Sept. 30, 2019, the company had a profit of $258 million on revenue of $4.48 billion. In the two previous fiscal years, Warner Music had net income of $312 million and $149 million, and revenue of $4.01 billion and $3.58 billion, according to the filing.
After going public in 2005, Warner Music was taken private by Access Industries Inc. in 2011 for $3.3 billion. Rival Universal Music Group was valued at roughly $34 billion last year in investments from around the globe. Access will still have control of Warner Music once the public share sale is complete.
Morgan Stanley, Credit Suisse and Goldman Sachs are lead underwriters, with BofA Securities, Citgroup and J.P. Morgan acting as joint bookrunners. Another 23 banks are acting as co-managers. The company has applied to list on Nasdaq under the ticker symbol “WMG.”
The IPO market has had a dry period during the coronavirus pandemic, with only a few small biotechs and blank-check companies, or special purpose acquisition companies (SPACs) venturing forth, according to Renaissance’s Smith. Blank-check companies have no set business until they acquire a company or companies with the money raised in an IPO.
While the secondary market has been on fire — May’s dollar volume of share offerings is the biggest since 2014, according to BTIG, as companies moved to bolster liquidity positions after the pandemic set in — new issuers have had to wait for an equity-market recovery from its pandemic lows, which looks to have arrived.
Proceeds from IPOs are down 64% so far in 2020, compared with the same period a year ago. The number of deals that have been completed is…
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