Universal Music has been the largest indie in the world since Tuesday - at least if you just take as a condition that a music company may not be majority owned by a group.

Because Vivendi's time as the majority owner is over with the spin-off.

However, the largest music company in the world was of course already a huge group of its own, which last year accounted for more than 80 percent of Vivendi's value in terms of earnings before taxes and interest.

Benjamin Fischer

Editor in business.

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As expected, the California-led company managed the largest IPO in Europe so far this year in Amsterdam. The first price was 25.05 euros - an increase of around 37 percent over the reference price of 18.50 euros - and the initial valuation was 46 billion Euro.

At lunchtime, the share was barely changed at around 25 euros.

Based on the reference price, Universal was valued at 33.5 billion euros on Monday evening.

$ 100 billion in sight?

However, industry observers and analysts had emphasized in advance that this rating was set low. Bank of America put the value of the music company in the run-up to the IPO, for example, at 50 billion euros, JP Morgan at 54 billion euros, which is still "conservative". Merck Mercuriadis, the head of the Hipgnosis fund, which specializes in buying music rights and holds shares in Neil Young's author catalog, even spoke to the Financial Times of a prospective valuation of 100 billion dollars. Number 3 in the music world, Warner Music, returned to the stock exchange in June 2020 and is currently valued at more than $ 20 billion - a significant increase since going public. However, Warner is significantly smaller than Universal.The second largest of the three “majors” is Sony Music.

After the spin-off, Vivendi still holds 10 percent of Universal and will henceforth focus on the book business, among other things.

A consortium led by the Chinese Tencent group had already secured 20 percent.

Another 10 percent is held by a hedge fund owned by the American William Ackman.

Vivendi major shareholder Vincent Bolloré, in turn, now holds around 18 percent through his group of companies.

"Beginning of a new wave of music consumption"

For Universal Music and for the industry there are still so many opportunities, Universal boss Lucian Grainge told the Guardian. "The market penetration of digital services in some of the largest countries is not yet at the level of more established markets". The 61-year-old Brit referred to the abundance of other marketing opportunities for music in addition to the streaming services Spotify, Apple or Amazon Music such as social media, gaming or fitness applications. All of this is the reason for their assumption that “we are only at the beginning of a new wave of music consumption”. Europe boss Frank Briegmann explained:

"

The successful IPO is a great compliment for our company and a milestone in our company's history. In the past few years we have shown that our musical content is a valuable and stable asset

. ”

Briegmann also emphasized that new technologies still offer a lot of potential and referred to the areas of networked cars and smart home applications, among other things.

In the past year Universal achieved a turnover of 7.4 billion euros and a net profit of 1.4 billion euros. The operating return on sales, based on earnings before taxes, interest, depreciation and amortization (Ebitda), was 20 percent. The most important item of income, the business with the marketing of music recordings, stood for almost 6 billion euros. 3.8 billion euros from the streaming business, which has been growing rapidly for years, again made up the lion's share. The sales of physical sound carriers stood for 945 million euros, but was particularly affected by the pandemic-related restrictions last year. The publishing division - responsible for the evaluation of author's rights - contributed 1.2 billion euros to the result.In December, Universal caused a sensation in the recently flourishing catalog sales market for renowned artists with the acquisition of Bob Dylan's author rights.

For 2020, Universal has recently - assuming constant exchange rates - an increase in sales of more than 10 percent in prospect. The Ebitda margin, in turn, is expected to grow by more than 20 percent.