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Spotify, Apple Music rival Deezer plans for IPO

French music streaming service Deezer is planning a flotation, the company announced on Tuesday, as it looks to step up its fight against larger rivals Apple Music and Spotify.

Deezer has filed a registration document with the French financial authorities, the first step towards an initial public offering (IPO) on the Euronext exchange in Paris.

"We have everything in place to scale up the business and be a part of the fast growing market, accelerate growth, invest in core market in terms of sales and products and be part of the streaming revolution," Deezer chief executive Hans-Holger Albrecht, told CNBC by phone.


Deezer

Albrecht added that the money raised will be used to invest in sales, distribution networks, more aggressive customer acquisition, and partnerships with telecoms companies to help push the product to more people.

The CEO said he hoped the IPO would be completed by the end of the year "subject to market conditions. He was not able to reveal how much the company was hoping raise.

‘Well-positioned’ vs rivals

Deezer's flotation plans come amid increasing competition in the music streaming space with Apple recently launching its own platform.

The French startup was founded in 2007 and said revenues surged 53 percent in 2014 to hit 142 million euros ($158.5 million). Deezer boasts 6.3 million subscribers and over 35 million tracks, but this still puts it behind some of its rivals.

Spotify for example has over 75 million active users while Apple said it had signed up 11 million trial members.

But Albrecht is convinced Deezer can stay ahead of the competition.

"It's a competitive market and there are a lot of people who want to join the race. But at the same time it's a complicated product and can't be built overnight," the chief executive told CNBC.

"We are the first pioneers in the industry, and if you look at our product, if you look at our localized content strategy, we are very well-positioned and it's not easy to catch up."


‘High demand’ for streaming

Deezer's current shareholders include Access Industries, Warner Music, Sony Music and Universal Music. They will not sell their shares but instead only new shares will be issued.

Albrecht said that Deezer went the IPO route rather than tapping venture capital because demand was strong on the public markets.

Music streaming has been a focus for investors. Spotify recently raised a $526 million in a funding round valuing it at over $8.5 billion, according to media reports.

"First of all, we took the decision early, we saw high demand when we it comes to streaming on the IPO market. Secondly, it gives us a much broader shareholder base which we like. Third, for Deezer, it is good to get the exposure and marketing boost," the CEO said.