Believe, a French company that bills itself as a new breed of music label for the streaming era, has scaled back the size of its initial public offering in what will be a key test for the Paris market this year.

The IPO is one of the highest-profile for the Paris market, which has roughly 30 flotations in the pipeline as it seeks to recover from the volatility triggered by the Covid-19 pandemic.

Those that have already been announced include OVH, a cloud computing provider, Aramis, the online seller of second-hand cars that is a unit of carmaker Stellantis, and Parts Holding Europe, a distributor of auto parts.

So far this year, seven listings have already been priced in Paris, allowing companies to raise €428m, according to data provider Dealogic. That leaves the market on track to exceed the €494m raised last year in eight IPOs but is still shy of pre-pandemic levels.

In 2019 eight IPOs took place in France raising €2.9bn, which put the country behind the UK, which had 30 listings that raised €5.7bn, according to Dealogic. It remained dwarfed by the US market, the biggest for IPOs, which in 2019 had 214 listings that raised €55.6bn.

Founded in 2005, Believe is seeking to go public to capitalise on renewed investor enthusiasm for the music sector, which has returned to growth after two decades of decline as subscription-based streaming services including Spotify, Deezer and Apple Music replace CD sales.

However, the company has scaled back its initial plan to raise €500m and said it would raise €300m instead despite what it called strong demand from investors.

Chief executive Denis Ladegaillerie said he had decided to raise less money because the feedback from investors was that they preferred a staged approach in which it would wait until later to raise funds for acquisitions from 2023 onwards.

“It would be less dilutive of our existing shareholders, and create a stronger value creation opportunity for our new shareholders,” he explained on a call with journalists. “So it was the smartest choice and will allow us to come back to the market to finance [acquisitions] in 2024 or 2025.”

Believe works with independent musicians and music labels to help them build up popularity via social media and put their work on streaming music platforms. Unlike more traditional labels that focus on the biggest musical acts, Believe provides services to a broad range of artists from individuals just starting out to more established ones, such as French rapper Jul and Australian band Parcels.

By raising €300m, Believe will have enough money to fuel its expansion plan through 2023 both through organic growth and by doing acquisitions. It had earlier pledged to spend €100m a year on deals from 2022 to 2025 compared with €126m since 2018.

Believe said the indicative price range was set at between €19.50 and €22.50 a share, which would give the group a market value of €1.9bn to €2.1bn if the IPO is completed.

Final pricing will be set on June 9, and trading of the shares due to start from June 10.

Citigroup, JPMorgan and Société Générale are acting as joint global co-ordinators and joint bookrunners, while Rothschild & Co is serving as an independent financial adviser.



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