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Spotify Nears $8.4 Bil Valuation, Attracting Sovereign Wealth

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Image: Spotify.com screenshot - April 12, 2015

Image: Spotify.com screenshot – April 12, 2015

Spotify AB, a streaming-music platform, is raising its seventh round of capital approaching US$ 400 million for a private placement. This would value the song-streaming company at US$ 8.4 billion. Spotify raised US$ 250 million in its last round back in November 2013. Spotify, first launched in 2008, competes heavily against Pandora Media Inc. and Apple Inc. In Europe, Spotify competes with Deezer – mostly in France. Another up and coming competitor is the Tidal streaming service which is being backed by U.S. rapper Jay Z (real name Shawn Corey Carter). Jay Z has attracted music artists such as Rihanna, Kanye West, Beyoncé (Jay Z’s wife), Coldplay and Taylor Swift. In 2014, Taylor Swift pulled her work from Spotify, claiming at the time that music streaming services didn’t value her art. She penned an op-ed in the Wall Street Journal back in 2014 saying, “Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is. I hope they don’t underestimate themselves or undervalue their art.”

Spotify CEO Daniel Ek responded back to Taylor Swift’s comments, saying that Spotify paid a total of US$ 2 billion in royalties to the music industry at the time.

Growing Subscriber Base

Spotify has around 15 million paid subscribers compared to March 2013’s figures of 6 million paid subscribers. Publicly-traded Pandora and Spotify both operate at a loss and share a significant portion of revenue with their music label partners. For Spotify, Sony Corporation’s Sony Music Entertainment, Paris-based media conglomerate Vivendi SA’s Universal Music Group and New York-based Access Industries’ Warner Music Group own under 15% of the company. Access Industries is controlled by billionaire Len Blavatnik. For these record companies, getting into the music streaming business is necessary for business diversification. In 2013, for the first time, Universal Music Group’s digital sales surpassed CD sales. Furthermore, these companies see that streaming subscription sales could offset a recent decline in downloaded music sales.

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SWFI First Read, June 21, 2018

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PSP Investments Nears Deal on Azelis

PSP Investments and EQT Partners (through fund EQT VIII) are in exclusive talks to acquire Belgium-based Azelis S.A. from funds managed by Apax Partners. Formed in 2001, Azelis is a specialty chemicals and food ingredients distributor. The transaction is subject to regulatory approvals.

Oxford Properties Wins Rights on Barangaroo Office Development

Melbourne-based Grocon Pty Ltd selected Oxford Properties, the real estate unit of OMERS, as a preferred partner for it’s a A$ 2 billion, 5.2-hectare Barangaroo Central project development. This is an office tower development. Oxford Properties essentially won the rights toward the project (rumored at a price of A$ 100 million), freeing the developer from a high-cost finance deal with Maxcap, a lender.

Investment Management Corporation of Ontario Selects Jean Michel as CIO

The Investment Management Corporation of Ontario named Jean Michel as chief investment officer. This role is effective July 3, 2018. Michel was executive vice president, advisory services to depositors and strategic analysis, at Caisse de Depot et Placement du Quebec (CDPQ).

Wil Warren Named President of Lexington Partners

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Large Public Asset Owners Commit to Goodman Brazil Logistics Partnership

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Canada Pension Plan Investment Board (CPPIB) unveiled plans to commit 500 million BRL (C$ 175 million) in equity for a 20% interest in the newly established Goodman Brazil Logistics Partnership to invest in prime logistics and industrial assets in the key gateway cities of São Paulo and Rio de Janeiro. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Mubadala Supports Two European Aquaculture Transactions

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Mubadala Investment Company is keen on growing exposure to agribusinesses whether in farming or aquaculture. With money from Mubadala and AMERRA Capital Management LLC, Andromeda Group acquired Nireus SA (at 74.34% stake) and Selonda SA at (79.62% stake), two European aquaculture companies that focus on sea bream and sea bass. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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