The clock is ticking for Europe's most highly anticipated IPO as it creeps towards a crucial date in the financial calendar of the company.
Spotify, the region's most highly funded tech startup, is approaching the deadline of a $1bn debt financing deal inked last year that will see the costs increase and a share of the compnay given away at a cheaper price.
Under the terms of the deal, after a year the interest on the cash will rise by one percentage point every six months on the original five per cent. A 20 per cent reduction on the IPO share price when TPG and Dragoneer Investment Group will convert debt to equity will grow by a further 2.5 per cent every six months.
The rise in costs will kick in from the end of March, putting pressure on the music streaming pioneer to go public sooner rather than later.
The 10-year-old firm, valued at $8.5bn but yet to turn a profit, could float as soon as the second quarter of the year, according to reports. Spotify revenues nearly doubled to €2bn in 2015, the latest figures available, while losses grew 10 per cent to €173m.
And according to its second largest investor after its founders, Spotify could also become profitable as soon as this year. "Up until now it's been growth, growth, growth," Northzone general partner Par-Jorgen Parson told Reuters before Christmas. "Maybe profitability will start to become a priority too."
Co-founder Martin Lorentzon stepped down as chairman in October 2016 with the role taken over by co-founder and chief executive Daniel Ek signalling it was putting its house in order, while shortly after, it abandoned plans to acquire SoundCloud.