French music group Believe stumbles on market debut

Shares in music group Believe, which has set out to create a novel music label for the streaming era, fell more than 13 per cent on its first day of trading, in what is likely to be a blow for 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 about €1.67bn as its shares dropped to around €17 in early French trading on Thursday, down from the offer price of €19.50.

The flotation marks the first tech listing on the Euronext Paris bourse since 2014, when online payments group Wordline went public, and is among roughly 30 flotations in the pipeline of the Paris market.

Believe had already priced its initial public offering at the bottom of its scaled-back price range, of between €19.50 and €22.50 a share, which would give the group a market value of €1.9bn to €2.1bn.

The disappointing response to the listing is a setback for the Paris market, which is trying to establish itself as a location for IPOs and foster the growth of tech companies. The fact Believe is in a fast-growing sector that is popular among investors is likely to add salt to the wound. 

The slip in Believe’s valuation on its debut follows a weak run for tech flotations this year after Deliveroo’s shares plunged 26 per cent on the company’s first day of trading in March, wiping almost £2bn from its opening £7.6bn market capitalisation.

Commodities broker Marex Spectron and Parts Holding Europe, a French distributor of auto parts, pulled their planned IPOs this month because of turbulent market conditions.

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Other French IPOs lined up for this year include OVH, a cloud computing provider, and Aramis, the online seller of second-hand cars that is a unit of carmaker Stellantis.

New investors in Believe include French mutual fund Fonds Stratégique de Participations and Sycomore Asset Management, which specialises in responsible investment.

Founded in 2005, Believe has been looking to capitalise on growing enthusiasm for the music sector, which has returned to growth after two decades in decline. 

Believe works with independent musicians and music labels as they seek to build popularity via social media and put their work on streaming music platforms. These include newcomers and more established artists, such as French rapper Jul, Australian band Parcels and Lebanese singer Nancy Ajram.

The company, which serves more than 850,000 artists, intends to use the €300m it has raised to expand into new countries, both through organic growth and further acquisitions.

This month, the company scaled back its initial ambitions, saying it would look to raise €300m rather than €500m in its flotation, because investors said they preferred a staged approach to raising funds. Founder and chief executive Denis Ladegaillerie, a former executive at Universal Music Group, said he planned to return to the market for finance in 2024 and 2025.

Believe’s biggest shareholder is California-based investment fund TCV, which holds a 42 per cent stake in the company, while other backers include French venture group Ventech, at 17 per cent, and London-based GP Bullhound. Ladegaillerie now owns a 13 per cent stake. About 15 per cent of the company’s shares will float freely on the public market.

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Citi, JPMorgan and Société Générale, BNP Paribas, Goldman Sachs, HSBC and UBS acted as joint bookrunners. Rothschild & Co acted as an independent financial adviser.


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