The next unicorn stock?
Montreal media company Stingray Digital Group is increasing its previously announced initial public offering (IPO) amid a frothy market for share sales in Canada. The privately-held company, best known for its commercial-free music streaming service Galaxie, now Stingray Music, will join Ottawa-based Shopify Inc. in tapping the public markets for the first time in the past two months and reaching unicorn status. Mogo Finance Technology Inc. is seeking to raise $50 million in an IPO, while Sleep Country Canada and Shred-It International Inc. are also mulling public sales.
Stingray focuses on its pay TV channels and sales of curated play lists to commercial clients like retailer Reitmans Canada Ltd and Loblaws. On the Internet, Stingray competes with companies including Spotify Ltd, Slacker Inc. and Pandora Media Inc.
The company was co-founded in 2007 by chief executive officer Eric Boyko with support from private-equity investors Novacap and Telesystem Ltd. when it started The Karaoke Channel. The offer is expected to close tomorrow June 3. The stock will begin trading on the Toronto Stock Exchange the same day, under the symbol RAY.A & RAY.B.
Part of the logic of the IPO is to let Novacap exit its position while Telesystem monetizes a portion of its stake. Mr. Boyko, who founded Stingray, will control the company through 'supervoting' shares.
One sector following analyst said investors are drawn to Stingray’s aggressive growth strategy and opportunities in addition to financial execution to date. The company says it has increased both sales and profit every year since 2008 about 40%.
The stock is being priced at $6.25 a share on the Toronto Stock Exchange, representing about 13 times the company’s trailing earnings before interest, taxes, depreciation and amortization.
At this price, Stingray’s market capitalization will reach almost $300 million at opening trade.
