Spotify Reaches Deal For $1 Billion In Debt Financing
March 30, 2016 at 3:59 AM (PT)
SPOTIFY has reached a deal to raise $1 billion in financing through convertible debt in a transaction places by GOLDMAN SACHS that is expected to close on FRIDAY (4/1), according to the WALL STREET JOURNAL.
The deal, in which SPOTIFY gets the funds without having to change its valuation, includes $750 million from private equity firm TPG's Special Situation Partners and Growth funds and hedge fund DRAGONEER INVESTMENT GROUP.
The deal comes with the catch that investors can convert the debt to equity at a discount to any IPO price, and the discount increases if the IPO doesn't happen within a year, as does the coupon payment on the debt, thus putting pressure on SPOTIFY to go public sooner. The funds will likely help SPOTIFY in its battle with APPLE MUSIC and possible competition in the on-demand field from PANDORA, as well as smaller competitors like RHAPSODY and TIDAL and the paid service from YOUTUBE.