Spotify Raises $1 Billion in Convertible Debt Financing
Private equity firm TPG and hedge fund Dragoneer Investment Group led the round with clients of Goldman Sachs.
As the streaming wars continue to heat up, Spotify is digging in its heels adding another $1 billion to its war chest. The Swedish market leader has raised $1 billion in convertible debt from investors, a Spotify spokesperson confirmed to Billboard.
News was first reported by the Wall Street Journal Tuesday (March 29) that private equity firm TPG and hedge fund Dragoneer Investment Group led the round, which also included clients of Goldman Sachs.
Convertible debt can be exchanged for stock later and comes with the advantage that it does not require a company valuation at the time of investment and hence does not risk diluting stock value when Spotify goes public. In contrast, equity investments take a share of the company for a specified price. A person familiar with the situation told Billboard the funds will be used for strategic purposes.
Initial reports of the deal broke in February, as it follows $526 million raised last summer in convertible bonds that put Spotify's valuation at $8.5 billion.
As Spotify continues to lead the streaming music industry with roughly 30 million subscribers, its competition is building -- namely Apple Music's more than 11 million paying users acquired in half a year.