Investors Tune In As Universal Makes Market Debut
- Stocks jump nearly 40% in early trade
- Vivendi shares fall following spin-off
- The highest European rating of the year
AMSTERDAM, Sept.21 (Reuters) – Shares of Universal Music Group (UMG.AS) jumped more than a third when they debuted on Tuesday as investors bet a music streaming boom still has a long way to go.
The world’s largest music label, which represents musicians and catalogs of songs from Billie Eilish to the Rolling Stones and Bob Dylan, has seen its market value jump to nearly 47 billion euros ($ 55 billion) in the highest European rating of the year.
The company was split by the French Vivendi (VIV.PA), which sold 60% of Universal’s capital to its shareholders. But that saw Vivendi’s own shares plunge more than 20% as investors reassessed the media group’s value without the music label.
American hedge fund billionaire William Ackman and Chinese Tencent (0700.HK) – among the big winners of the Amsterdam listing, alongside Vivendi controlling shareholder Vincent BollorÃ© – retain large shares of Universal. Read more
The Universal share was trading at 25.70 euros at 07:30 GMT, up about 39% from its benchmark price of 18.50 euros.
Shares of BollorÃ©, which owns 27% of Vivendi (VIV.PA), rose 2.8%, while Amsterdam-listed shares of Bill Ackman’s Pershing (PSH.AS) rose around 5%.
Universal’s strong debut will be a vindication for Ackman, who was forced into an embarrassing turnaround after US regulators blocked his plan to invest in Universal through his Special Purpose Acquisition Company (SPAC) in July.
Instead, he chose to take a 10% stake through his main hedge fund Pershing Square, which is now based on a paper gain of more than 30%.
FROM BEATLES TO BIEBER
Universal, whose other successful singers and catalogs include Justin Bieber and The Beatles, hopes to build on deals with ad-supported sites like TikTok and YouTube as well as streaming services like Spotify.
Part of his business derives from the rights attached to his huge catalog, and he also collects royalties for the artists he represents on social media platforms and in remote locations.
The COVID-19 pandemic has hit Universal’s live concerts and merchandising activities, but ad-supported revenue has picked up after a jolt.
Its IPO carries high stakes for the owner of Canal + Vivendi, who hopes in the longer term to get rid of a conglomerate discount which, according to him, has weighed on his shares.
Universal has increased its revenues for six consecutive years. He forecast revenue growth of at least 10% this year and single digits thereafter. Read more
The listing is Euronext’s latest victory in Amsterdam, which has developed as a financial center following Britain’s departure from the European Union. Prior to Universal, Amsterdam had attracted a record 14 IPOs this year.
Separating Universal from Vivendi deprives the Parisian group of its most precious asset. Vivendi announced on Tuesday that it would now hold 10.13% of the capital of Universal.
($ 1 = 0.8522 euros)
Reporting by Toby Sterling, Sudip Kar-Gupta, Gwenaelle Barzic Writing by Ingrid Melander and Sarah White Editing by Mark Potter
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