Warner Music and ZoomInfo Poised to Breathe Life Into IPO Market
June 02 2020 - 5:59AM
Dow Jones News
By Corrie Driebusch
Two big stock-market debuts are set to reinvigorate the U.S. IPO
market this week.
Warner Music Group Corp. and ZoomInfo Technologies Inc. plan to
list their shares Wednesday and Thursday in what would be the
biggest overall IPO and the top new technology issue of the year,
respectively. They are expected to raise roughly $2.5 billion
combined if the shares price at the midpoints of their target
ranges.
Together with three other companies expecting to make their
debuts, nearly $3 billion would be raised, making it the biggest
week of the year for U.S.-listed initial public offerings,
according to Dealogic.
Warner Music is aiming to sell 70 million shares at between $23
and $26 apiece late Tuesday, which would value the company at $11.7
billion to $13.3 billion. Morgan Stanley, Credit Suisse Group AG
and Goldman Sachs Group Inc. are among the banks leading the
offering. ZoomInfo plans to sell 44.5 million shares at between $16
and $18 each the following day. JPMorgan Chase & Co. and Morgan
Stanley are leading that sale.
Warner Music, the record company, is telling investors it
expects to price its IPO in the upper half of its range, while
ZoomInfo, a marketing-data company, is indicating it sees landing
above its range, according to people familiar with the matter.
The other IPOs on deck this week are those of biopharmaceutical
companies Applied Molecular Transport Inc. and Pliant Therapeutics
Inc. and payment processor Shift4 Payments LLC.
The burst of activity comes after months of relative quiet in
the IPO market, with potential issuers scared away by the
coronavirus pandemic and the economic damage and financial turmoil
it has caused. With markets having rebounded sharply and
pandemic-imposed shutdowns beginning to lift, issuers are starting
to return. Should this week's crop of IPOs fare well, a host of
companies are likely to follow in the coming months, according to
bankers.
The success of Warner Music and ZoomInfo, measured by how much
demand there is for the shares both before and after they start
trading, could hinge on steps taken in the months leading up to
their official launches.
Executives at both companies were able to speak with potential
investors in so-called testing-the-waters meetings before travel
came to a near halt. That gave the investors more comfort to put in
orders for shares, some of them said, even though they were
deprived of the in-person roadshow meetings that precede new
listings in normal times. Instead, Warner Music and ZoomInfo
executives conducted virtual roadshows, trying through video chats
to persuade investors to buy their stock.
Also key for drumming up demand: both companies worked to secure
a significant chunk of their IPO proceeds ahead of time. Warner
Music has discussed investments totaling more than $1 billion of
its fundraising goal with institutions as well as with the Chinese
internet company Tencent Holdings Ltd., The Wall Street Journal
reported last week. BlackRock Inc., Dragoneer Investment Group and
Fidelity are named as so-called anchor investors planning to buy up
to $100 million of shares each in ZoomInfo's IPO, according to a
regulatory filing.
Both Warner Music and ZoomInfo appear to be weathering the
pandemic relatively well.
ZoomInfo said in the regulatory filing that it expects to
experience "slowed growth or decline in new customer demand for our
platform" as well as lower demand from existing customers because
of the pandemic, yet added that its annualized value of contracts
with new customers rose 87% in April from a year earlier.
Warner Music, meanwhile, enjoyed in April a 12% jump in
streaming revenue, the largest contributor to its top line. While
that, according to its prospectus, was more than offset by
decreases related to the coronavirus in areas including
ad-supported digital and physical revenue, those areas are expected
to recover.
--Anne Steele contributed to this article.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
June 02, 2020 05:44 ET (09:44 GMT)
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