Shares of music group Believe, which set out to create a new music label for the streaming age, fell more than 17% on its first day of listing, which is expected to be a blow to the French market. as it tries to recover from pandemic volatility.
Believe, whose brands include New York-based platform TuneCore and its own family of labels, reached a valuation of € 1.53 billion as its shares closed at € 16 on Thursday, down from the offer price of 19.50 euros.
The IPO marks the first technology listing on the Euronext Paris stock exchange since 2014, when the online payment group Worldline went public, and is one of around 30 IPOs in the Paris market pipeline.
Believe had already valued its IPO at the bottom of its reduced price range, between 19.50 and 22.50 euros per share, which would have given the group a market value of 1.9 to 2.1 billion euros. euros.
The disappointing response to listing is a setback for the Parisian market, which is trying to establish itself as a place for IPOs and foster the growth of technology companies. The fact that Believe is in a fast growing industry that is popular with investors is likely to add salt to the plague.
Believe’s drop in valuation in its early days follows weak IPO gains this year after Deliveroo shares fell 26% on the company’s first trading day in March, wiping out nearly $ 2 billion. pounds sterling on its opening market capitalization of 7.6 billion pounds.
Commodity broker Marex Spectron and Parts Holding Europe, a French distributor of auto parts, withdrew their scheduled IPOs this month due to turbulent market conditions.
Other French IPOs slated for this year include OVH, a cloud computing provider, and Aramis, the online used car seller which is a unit of automaker Stellantis.
Among Believe’s new investors are the French mutual fund Fonds Stratégique de Participations and Sycomore Asset Management, which specializes in responsible investment.
Believe has been valued at a multiple of about half that of other music majors such as Warner Music Group and Universal based on the value of company sales for 2022, according to a person close to the company. . That’s about two-thirds that of Spotify.
The person said the limited level of free float stocks – at just 15% – dampened the share price, although he acknowledged that Believe’s atypical model also made investors cautious.
“It’s a hot market and a very attractive model, many investors have recognized it, but in the end [Believe] looks a bit like the outsider in this market, ”they said. “There is a wait-and-see attitude on the part of some investors. “
Founded in 2005, Believe has sought to capitalize on the growing enthusiasm for the music industry, which has returned to growth after two decades of decline.
Believe works with independent musicians and music labels to gain popularity through social media and put their work on music streaming platforms. These include newcomers and more established artists, such as French rapper Jul, British artist La Roux and Lebanese singer Nancy Ajram.
The company, which serves more than 850,000 artists, intends to use the 300 million euros it has raised to expand into new countries, both through organic growth and through additional acquisitions.