Stockholm-based music licensing platform Epidemic Sound is exploring strategic options, including a potential initial public offering (IPO) of shares as early as next year.
That’s according to a report by Reuters on Tuesday (May 14), citing sources familiar with the matter. The company reportedly expects to appoint advisors in the coming months to prepare for the public listing.
Epidemic Sound was last valued at $1.4 billion in a $450 million funding round in 2021 that saw Blackstone Growth (BXG) and EQT Growth acquire stakes in the company. The company’s existing investors before the latest round included Creandum and EQT Mid-Market, as well as Atwater Capital.
Discussions about an IPO are at an early stage, and there is no guarantee that one will take place, the sources said. Epidemic Sound did not comment on the news, and neither did its shareholders Blackstone and EQT.
Founded in 2009, Epidemic Sound provides royalty-free music and sound effects to content creators and brands through a subscription model. Its music library boasts over 40,000 tracks, and Epidemic Sound claims its music features in YouTube and TikTok videos with a total of 2.5 billion daily views.
In 2023, its net sales grew 25% to SEK 1.477 billion ($139.3 million at the average exchange rate for 2023), allowing the company to trim its operating loss (loss before interest and taxes) to SEK 486 million from SEK 492 million in 2022. Ruling out the effects of depreciation, Epidemic would have seen an operating profit of SEK 25 million, it said in its 2023 earnings report published in April.
An IPO could provide Epidemic Sound with funds to fuel its growth. The company could use the proceeds to roll out more tools such as its AI-powered music discovery tool, Soundmatch, which launched last year. This tool analyzes video content and suggests suitable soundtracks, saving creators time.
Following its 2019 South Korean expansion, Epidemic Sound might use IPO proceeds to enter new markets, or make strategic acquisitions. In 2022, the company acquired independent record label, A-P Records, expanding its presence in the mood music arena.
The news of Epidemic Sound’s potential IPO comes amid a wave of dealmaking in the music industry. Blackstone is poised to acquire Hipgnosis Songs Fund, which owns the rights to music by artists like Blondie and Justin Bieber, after another bidder, Concord, bowed out of the race.
EQT, another investor in Epidemic Sound, is part of a consortium seeking to buy digital music distribution company Believe, the only bidders left in that race after Warner Music Group bowed out. The consortium that includes EQT on March 8 said it has “fully negotiated and signed binding agreements with shareholders representing 71.92% of Believe’s share capital.”
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