Analysis

Reports claim Spotify has already filed to go public


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Spotify may go public in the first quarter of this year, according to several reports citing the company’s confidential filing of documents with the US Securities and Exchange Commission in December.

“All indications are that Spotify wants to list in Q1, and timing of the confidential F-1 filing would support such a calendar,” claimed Axios. “Spotify sent confidential documents to the SEC in late December with the aim of listing its shares in the first quarter of this year,” added Bloomberg.

Even a lawsuit from Wixen Music Publishing seeking $1.6bn in damages for unlicensed mechanicals doesn’t appear likely to throw a last-minute spoke in the works of Spotify’s plans to go public, although it will certainly be a talking point for potential investors in the streaming service.

For now, the filing documents are secret, but based on previous examples of companies using this method of filing, they’ll be made public around two weeks before Spotify’s share offering.

In separate news, Recode suggests that Spotify has already solved one of the less talked-about roadblocks to its public-listing ambitions: its $1bn round of debt funding in 2017 led by TPG and Dragoneer Investment Group, with its terms tied to an ultimate IPO for Spotify.

The problem being that opting for a ‘direct listing’ instead (going public without a traditional IPO) Spotify had to solve the question of how to deliver the promised return on those debt-funders’ investment.

Recode claims that the two companies “late last year turned some of that debt into equity, which the companies then sold to Tencent”, adding that they “converted the debt into equity at about a $10bn valuation and then sold it to the Chinese conglomerate at about a $20bn valuation”.

That’s good news for Spotify (and those investors) although not something likely to soothe the company’s critics within the publishing community pressing for more clarity on how Spotify plans to deal with its mechanical-licensing challenges.

Stuart Dredge

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