French digital music company Believe stumbled on its market debut. Shares slid more than 13% on their first day of trading.
Believe is a major player in the indie distribution and label services world, though its bow on the Paris stock exchange proved lukewarm. The French company reached a valuation of roughly €1.67 billion ($2.03 billion) as shares dropped to €17, down from the offer price of €19.50.
Believe owns New York-based Tunecore as part of its own family of properties, though its portfolio and reach failed to generate serious market excitement. Heading into Thursday, Believe priced its initial public offering (IPO) at the bottom of its scaled-back price range. Originally, the group was looking at €22.50 a share for a high-end valuation of €2.1 billion ($2.56 billion). The disappointing trading day following its listing on the Euronext Paris bourse may have ramifications for other European IPOs.
Believe has been valued at a multiple of roughly half that of majors Warner Music Group and Universal Music Group on an enterprise value-to-sales basis for 2022, according to a report from Financial Times. New investors in Believe include the French mutual fund Fonds Stratégique de Participations, and Sycomore Asset Management.
“It’s a hot market and a very attractive model, a lot of investors acknowledged that,” one source told Financial Times. “But in the end, [Believe] looks a bit like the underdog in this market. There is a wait-and-see attitude from some investors.”
First founded in 2005, Believe works with independent musicians and music labels to manage distribution details and ultimately build sustainable careers though label services. Some artists under the Believe umbrella include French rapper Jul, Australian band Parcels, and Lebanese singer Nancy Ajram.
There are more than 850,000 artists served under the Believe umbrella. The company intends to use the €300 million it has raised to expand into new countries, both through organic growth and acquisitions. Believe Digital fully acquired Tunecore in 2015 and retains its unique operations and staffing.
“The funds raised will allow us to invest in our innovative technology platform and to implement our ambitious strategy of targeted acquisitions,” founder and CEO Danis Ladegaillerie said in a statement. Believe will use €90 million to repay funding from an existing credit agreement. It will also start a new €170 million revolving credit facility to fund its expansion efforts.
Believe Digital has offices in 29 countries and a staff of over 250 music industry and digital marketing experts. Believe has a staff of music industry specialists, including label managers and video channel managers to provide label services for emerging artists.