Swedish telecommunications giant Telia has sold its minority stake in Spotify for a total consideration of $272m in private trades.
Telia acquired a 1.4% stake in Spotify in June 2015 when it invested $115m in the company.
Its exit price means that the firm achieved a 2.4X return on it investment.
That nugget of information is useful in trying to ascertain Spotify’s current valuation in the private commercial world – although there are some conduits required.
First, the plain maths: If Telia’s 1.4% stake still applied during its sale, then a $272m price would mean that Spotify’s total current market worth is $19.43bn.
That’s slightly on the light side compared with some analyst models of Spotify’s current market worth.
“We wish Spotify all the best in its next phase as a truly global listed company.”
Johan Dennelind, Telia (pictured)
For example, according to New York bank Manhattan Venture Partners, Spotify shares have been changing hands for as much as $150 in the last fortnight – suggesting a $26.5bn valuation.
However, reverse-engineering the Telia stake is likely to result in a conservative figure, because we don’t know two crucial pieces of information: (i) Whether that 1.4% stake was diluted in the two-and-a-half years since it was initially acquired; and (ii) How many separate trades culminated in the $272m sale haul, and over what timeframe.
Telia itself says that the equity sell-off was conducted across ‘several steps over some time’ – suggesting that some fragments of the sale could have taken place at lower valuations than Spotify’s worth today.
Either way, here’s what we know for sure: Telia’s sale tells us that Spotify’s current valuation in private markets must be at least $19.43bn.
Nevertheless, it is interesting that Telia has opted to realize its investment in Spotify before the streaming company throws itself into the uncertain world of the US stock exchange.
“We wish Spotify all the best in its next phase as a truly global listed company. Spotify has been a fantastic investment for Telia Company, both from a direct return and a partnership perspective,” says Johan Dennelind, President and CEO of Telia Company.
Before Telia took its stake in Spotify, the two companies teamed up in October 2009 through an exclusive agreement whereby Telia included Spotify Premium in its offerings.
Spotify will float on the New York Stock Exchange later today (April 3).Music Business Worldwide