By Corrie Driebusch
Two big stock-market debuts are set to reinvigorate the U.S. IPO market this week.
Warner Music Group Corp. and ZoomInfo Technologies Inc. plan to list their shares Wednesday and Thursday in what would be the biggest overall IPO and the top new technology issue of the year, respectively. They are expected to raise roughly $2.5 billion combined if the shares price at the midpoints of their target ranges.
Together with three other companies expecting to make their debuts, roughly $3 billion would be raised, making it the biggest week of the year for U.S.-listed initial public offerings, according to Dealogic.
Warner Music is aiming to sell 70 million shares at between $23 and $26 apiece late Tuesday, which would value the company at $11.7 billion to $13.3 billion. Morgan Stanley, Credit Suisse Group AG and Goldman Sachs Group Inc. are among the banks leading the offering. ZoomInfo plans to sell 44.5 million shares at between $19 and $20 each the following day. JPMorgan Chase & Co. and Morgan Stanley are leading that sale.
Warner Music, the record company, is telling investors it expects to price its IPO in the upper half of its range, according to people familiar with the matter. ZoomInfo, a marketing-data company, boosted its range Tuesday morning from $16 to $18. The Wall Street Journal earlier reported it was likely to price above that.
The other IPOs on deck this week are those of biopharmaceutical companies Applied Molecular Transport Inc. and Pliant Therapeutics Inc. and payment processor Shift4 Payments LLC.
The burst of activity comes after months of relative quiet in the IPO market, with potential issuers scared away by the coronavirus pandemic and the economic damage and financial turmoil it has caused. With markets having rebounded sharply and pandemic-imposed shutdowns beginning to lift, issuers are starting to return. Should this week's crop of IPOs fare well, a host of companies are likely to follow in the coming months, according to bankers.
The success of Warner Music and ZoomInfo, measured by how much demand there is for the shares both before and after they start trading, could hinge on steps taken in the months leading up to their official launches.
Executives at both companies were able to speak with potential investors in so-called testing-the-waters meetings before travel came to a near halt. That gave the investors more comfort to put in orders for shares, some of them said, even though they were deprived of the in-person roadshow meetings that precede new listings in normal times. Instead, Warner Music and ZoomInfo executives conducted virtual roadshows, trying through video chats to persuade investors to buy their stock.
Also key for drumming up demand: both companies worked to secure a significant chunk of their IPO proceeds ahead of time. Warner Music has discussed investments totaling more than $1 billion of its fundraising goal with institutions as well as with the Chinese internet company Tencent Holdings Ltd., the Journal reported last week. BlackRock Inc., Dragoneer Investment Group and Fidelity are named as so-called anchor investors planning to buy up to $100 million of shares each in ZoomInfo's IPO, according to a regulatory filing.
Both Warner Music and ZoomInfo appear to be weathering the pandemic relatively well.
ZoomInfo said in the regulatory filing that it expects to experience "slowed growth or decline in new customer demand for our platform" as well as lower demand from existing customers because of the pandemic, yet added that its annualized value of contracts with new customers rose 87% in April from a year earlier.
Warner Music, meanwhile, enjoyed in April a 12% jump in streaming revenue, the largest contributor to its top line. While that was more than offset by decreases related to the coronavirus in segments including ad-supported digital and physical revenue, those areas are expected to recover.
--Anne Steele contributed to this article.
Write to Corrie Driebusch at firstname.lastname@example.org