The decade may be young, but the 2020s are off to a roaring start for music industry investors. Already this year, two record labels, Warner Music Group and South Korean powerhouse Big Hit Entertainment, home of K-Pop stars BTS, had successful initial public offerings in June and September, respectively. Universal Music Group, the largest record label and second-biggest music publisher, plans to have an IPO by 2022.
French music distributor Believe could be next. Believe, a diverse music company that spans record labels to merchandise, is planning an IPO on either a Paris or New York exchange in 2021, Reuters reported on Nov. 12.
The hoped-for valuation of reportedly €2 billion ($2.4 billion) is relatively small compared to other publicly traded music companies. Still, based on deals this year, Believe could fetch an EBITDA multiple around 20. In other words, Believe could raise $20 for every $1 of earnings before interest, taxes, depreciation and amortization. A 20 EBITDA multiple would be inline with Believe's competitors: Warner Music Group currently trades at 20.5 times, trailing 12-month adjusted EBITDA. Tencent paid 26.7 times 2019 EBITDA when its deal for 10% of Universal closed in March.