The AIM-listed podcasting group backed by property tycoon Nick Candy has called in bankers to launch a strategic review that could trigger a takeover by a rival.
Daily Week News has learnt that Audioboom Group has asked Raine, a New York-based merchant bank, to help it explore a merger or sale.
An announcement confirming Raine’s appointment could come as soon as next week.
Audioboom, which has had a turbulent financial history, hosts podcasts from The Spectator magazine, the former rugby player Lewis Moody and Sue Perkins, the broadcaster.
In total, it has more than 13,000 ‘content channels’, which are listened to more than 60m times every month.
City sources said this weekend that big players in the fast-growing audio market, including Spotify, the New York-listed digital music group, could be among prospective bidders for Audioboom.
News Corp, which owns TalkSport, Global, the owner of stations such as Capital and Smooth, and US-based iHeart Media were also suggested by analysts as potential buyers.
Audioboom’s largest shareholder, Candy Ventures, which was founded by Nick Candy, the property and technology investor, is another possible contender to take the company private.
On Friday, Audioboom announced that it had secured a $4m loan from a vehicle owned jointly by Candy Ventures and Michael Tobin, the podcaster’s chairman.
“Historically, the growth of Audioboom has been financed by the issue of equity with consequential dilution to the company’s shareholders, and the board believes that the expectation of potential equity issues has had a negative impact on the company’s share price,” it said in a statement to the stock exchange.
“The board is increasingly confident in management’s ability to forecast performance and growth prospects, as demonstrated by the recently announced 2019 year-end trading update, in which market expectations were exceeded for the first time in the company’s history.”
Audioboom’s shares rose by more than 4% on the news, closing at 222.5p and giving it a market value of almost £30m.
The company recorded revenues last year of $23m, with this year’s figure expected to be between $35m and $40m.
As much as half of that turnover has already been secured, according to insiders.
Some leading investors are frustrated that Audioboom has suffered from broader sentiment towards London’s junior AIM market, and believe it should be valued comparably to US peers, which typically trade at about four times revenues.
Although it remains loss-making, Audioboom’s brightening financial outlook led broker Allenby Capital to upgrade its forecasts for sales and earnings.
The developments come two years after the company came close to collapse following the abandonment of a £130m reverse takeover of Triton Digital, an American rival.
It has since turned to shareholders for a series of capital injections, but now has sufficient cash reserves until it becomes EBITDA-positive.
Candy Ventures, which owns 26% of the shares, is also said to be willing to support Audioboom with further financing if it is required.
Analysts believe that the podcasting sector has begun a long-term phase of rapid growth amid shifting media consumption habits.
This week, Spotify bought The Ringer, a sports podcaster boasting more than 100m monthly downloads.
Another player in the sector is Luminary, which charges a monthly subscription fee.
The appointment of Raine to oversee the strategic review is notable because the merchant bank has emerged as one of the key players in the global digital music sector, investing in companies such as Soundcloud and advising on a series of high-profile deals.
Audioboom and Candy Ventures declined to comment on Saturday.