Australian music streamer Guvera Ltd, which competes with Apple Inc, Spotify Ltd and Pandora Media Inc, said it plans to raise up to A$80 million ($58.05 million) in a listing to bankroll an ambitious expansion in developing markets.
In a listing prospectus lodged on Wednesday, the company with operations from India to Russia said it aims to sell 80 million shares for A$1 each to fund growth in emerging markets.
The company added that post listing, it will have a market capitalisation of A$1.3 billion, based on the number of shares to be kept by existing shareholders of the company started in the beachfront city of Gold Coast in 2008.
That would make Guvera the biggest Australian player in the global music streaming industry, which it said is forecast to grow revenue by more than 10 percent a year until at least 2019, and which has traditionally been dominated by U.S. heavyweights.
The Australian company said it doesn’t charge most users and gets most of its revenue from advertising. It plans to build on its current base of 14 million subscribers, Guvera said.
“That sort of model, if it works, is quite lucrative because you’re getting a lot of operating leverage in the business and the cost of adding a subscriber is minimal,” said Daniel Mueller, senior analyst at Forager Funds Management Pty Ltd.
The company said Australian subscribers grew more than ten-fold from January to December last year, and that its India subscribers grew from 1.7 million to 7 million from January to May 2015. It did not give further growth figures or India.
It said 2015 was the first year in more than two decades when recording industry revenue rose globally, driven by a 45 percent rise in streaming music revenue as more people took to the service thanks to faster internet and better access to smartphones.
Still, corporate adviser D H Flinders Ltd, which is running the offering, will have to reassure investors about Guvera’s prospects given the prospectus said it “has a history of operating losses and expects operating losses and negative operating cash flow to continue in the future”.
The prospectus added that the company has no immediate plans to pay dividends, and forecast a net loss of A$55.7 million for fiscal 2016, better than the previous year’s A$81.1 million loss