Steinway Musical Instruments looks to hit the right note with IPO

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In 1853, Franklin Pierce became President of the United States, Washington became a territory, and Levi Strauss started his clothing and dry goods business in San Francisco.

In the same year, a German immigrant named Henry Engelhard Steinway developed the first Steinway piano in a loft at 85 Varick Street in New York City.

Steinway, who passed through Steinweg at the time, had a simple goal: “To build the best piano possible”.

“No other choice but Steinway”

The company has grown considerably since those early days, and the list of artists who have used Steinway pianos ranges from Irving Berlin and Cole Porter to Sergei Rachmaninoff to Diana Krall and Billy Joel.

“If I’m going to play my best, there’s no other way than Steinway,” pianist Lang Lang once said.

Now, Steinway Musical Instruments Holdings has filed with the Securities and Exchange Commission to list its shares on the New York Stock Exchange under the symbol STWY.

“The Steinway The piano was the instrument of choice for approximately 97% of concert pianists when performing with orchestras around the world during the 2018-2019 concert season,” the company said in its filing.

Steinway first went public in 1996, under the symbol LVB for Ludwig van Beethoven, until billionaire hedge fund manager John Paulson bought the company in 2013.

“As custodian of Steinway, John Paulson has focused on investing in our business, including technology, company-owned showrooms, our manufacturing processes and machinery, and on training our workforce to create a stronger team,” the filing reads.

‘Established and profitable company.’ Is the timing right?

Goldman Sachs, Bank of America Securities and Barclays are joint lead managers and representatives of the proposed offering.

But is it the right time for an IPO?

A report published last month by accounting firm EY found that the IPO market had experienced a significant slowdown from 2021, due to factors including rising geopolitical tensions, stock market volatility and concerns. regarding rising commodity and energy prices.

EY said there has also been a considerable drop in SPAC IPOs, as well as cross-border, unicorn and mega IPOs, which are those with proceeds above $1 billion.

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“The IPO market has gone from remarkably warm to remarkably cold since the start of the year,” said Jay Ritter, a professor at the University of Florida’s Warrington College of Business.

Ritter said 2021 was the busiest U.S. IPO market since 2000, by a wide margin. However, only six IPOs that have raised more than $100 million have been launched this year.

“Steinway Musical Instruments Holdings is an established, profitable business with annual sales of $538 million and after-tax profits of $59.2 million for 2021,” he said. “It will have no trouble finding IPO investors at a valuation of over $1 billion.”

tradition and innovation

Innovation turns out to be a source of revenue, as Steinway introduces technology that Henry Engelhard Steinway could never have imagined.

In 2015, the company launched the Spirio mechanical piano, which features recorded performances by renowned pianists.

Spirio | r, introduced in 2019, allows high resolution recording and editing in addition to playback.

Last year, the company launched Spiriocast, which streams live performances, in sync with video and audio, from a piano to listeners and viewers anywhere in the world.

Sales of Spirio and Spirio | r pianos grew at a compound annual rate of more than 30% from 2016 to 2021 and represented approximately 32% of the company’s piano segment net sales in 2021.

New market of critical importance

Steinway is also looking to China, due to “a deep-rooted reverence for classical music, particularly piano music, and a large and growing middle and upper class with an appetite for Western products of luxury”.

China is the world’s largest market for pianos and has about 40 million practicing pianists, the company said. That’s about seven times the number of practicing pianists in the United States

Steinway said about 30 million children in China take piano lessons, compared to less than 10 million in the rest of the world, “suggesting that the majority of children playing the piano in the world are in China.”

“Despite the prevalence of the piano in China and the strength of our brand in the region, we have always been under-penetrated in the country, selling about half as many Steinway grand pianos in China as in the American market,” says the case.

As China continues to grow and accumulate wealth, Steinway said it will “seek to capture the growing demand for ultra-premium pianos from private customers”.

“Over the past 20 years, we have transformed our business in China to sell more pianos to private customers rather than institutions,” the company said.

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