Warner, ZoomInfo Enliven IPO Scene -- WSJ
June 03 2020 - 3:02AM
Dow Jones News
By Corrie Driebusch
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 3, 2020).
Two big IPOs are set to reinvigorate the market for new issues
this week, as the rebound in stocks encourages companies forced to
the sidelines by the coronavirus pandemic to revive listing
plans.
Warner Music Group Corp. and ZoomInfo Technologies Inc. plan to
list their shares Wednesday and Thursday, respectively, potentially
raising more than $2.5 billion combined. Together with three other
companies expecting to make their debuts, the listings would make
the week the year's biggest for U.S. initial public offerings,
according to Dealogic.
The burst of activity comes after months of relative quiet, with
potential issuers scared away by the pandemic and the ensuing
economic damage and financial turmoil. With shutdowns beginning to
lift, and the benchmark S&P 500 index now down less than 5% on
the year, 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.
Grocery giant Albertsons Cos., for example, plans to launch a
roadshow to market its shares as early as this month, while online
used-car seller Vroom Inc. did so this week.
Some debuts that were to take place in 2020 will likely remain
on ice. The pandemic and the dramatic blow it has delivered to the
travel and hospitality industry will likely delay Airbnb Inc.'s
highly anticipated IPO until at least 2021, according to people
familiar with the matter.
And even with the pickup, the IPO market is unlikely to return
any time soon to the robust health it enjoyed early last year
before stumbling, as investors punished companies with big losses.
By the end of December, shares of companies that went public in the
U.S. in 2019 were on average up less than the S&P 500,
according to Dealogic -- an inversion of what's typical.
Warner Music is targeting a range of $23 to $26 for its shares,
which would value the record company at $11.7 billion to $13.3
billion and make it the biggest IPO of the year. The company
expects to price the stock in the upper half of that range,
according to people familiar with the matter. Warner Music delayed
its meeting to set an IPO price to Wednesday morning from Tuesday
evening in deference to a move by record labels to suspend work
Tuesday in support of the protests over the death of George Floyd,
one of the people said.
ZoomInfo, a marketing-data company, plans to sell 44.5 million
shares at between $19 and $20 each, a range it boosted Tuesday
morning amid strong demand. At the midpoint, the company would
raise more than $850 million, making it the biggest technology IPO
of 2020.
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 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 the company added that its annualized value of
contracts with new customers rose 87% in April from a year
earlier.
Warner Music, meanwhile, in April enjoyed a 12% jump in
streaming revenue, the largest contributor to its top line. While
that was more than offset by decreases related to the coronavirus
in segments including ad-supported digital and physical revenue,
those areas are expected to recover.
Morgan Stanley, Credit Suisse Group AG and Goldman Sachs Group
Inc. are among the banks leading the Warner Music offering.
JPMorgan Chase & Co. and Morgan Stanley are leading the
ZoomInfo sale.
--Anne Steele contributed to this article.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
June 03, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.