Universal Music Group surges on market debut as investors tune in

Universal Music Group's listing will be Europe's largest this year. PHOTO: REUTERS

AMSTERDAM (REUTERS) - Shares of Universal Music Group (UMG) surged at the start of trading on Tuesday (Sept 21), as the company behind singers such as Lady Gaga and Taylor Swift made its stock market debut.

The world's biggest music label saw its market value leap to almost €47 billion (S$74.5 billion) after its shares jumped by more than a third in their stock market debut on Tuesday.

UMG's listing will be Europe's largest this year. The company was spun off by French media group Vivendi, which handed a 60 per cent stake in Universal to its shareholders.

UMG is betting that a Spotify-led streaming boom, which has fuelled royalty revenue and profit growth for several years, still has a long way to run in a music industry it dominates along with Warner and Sony Music.

Its flotation carries high stakes for TV channel Canal+ owner Vivendi, which hopes to rid itself of a conglomerate discount. However, the listing raises questions about Vivendi's strategy once it parts ways with its cash cow, in which it will retain only a 10 per cent stake.

Several high-profile investors have also already snapped up large UMG stakes, banking in part on the group's back catalogue, which includes the likes of Bob Dylan and the Beatles.

They also hope deals with ad-supported software and social media platforms, such as Alphabet's Google, YouTube and TikTok, will sustain its performance and valuation.

United States billionaire William Ackman suffered a setback when his attempt to invest in UMG via a special purpose acquisition vehicle (Spac) hit a snag with regulators and investors. However, he still took a 10 per cent stake via his Pershing Square hedge fund.

UMG has grown revenue for six years in a row. It has forecast revenue growth of at least 10 per cent this year and in the high single digits after that.

The listing is the latest win for Euronext in Amsterdam, which has grown as a financial centre in the wake of Britain's departure from the European Union. Before UMG, Amsterdam had attracted a record 14 initial public offerings so far this year, of which 10 were Spacs.

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