In 1853, Franklin Pierce became President of the United States, Washington became a territory, and Levi Strauss started his clothing and haberdashery business in San Francisco.
That 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, then calling itself Steinweg, had a simple goal: “To build the best possible piano.”
“No way, but Steinway”
The company has grown dramatically since those early days, and the list of artists who have used Steinway pianos ranges from Irving Berlin and Cole Porter to Sergei Rachmaninoff, Diana Krall and Billy Joel.
“If I want to do my best, there is no other way than Steinway,” said the pianist Lang Lang once.
Steinway Musical Instruments Holdings has now filed with the Securities and Exchange Commission to list its shares on the New York Stock Exchange under the ticker symbol STWY.
“The Steinway 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 a statement.
Steinway first went public in 1996 and traded under the ticker symbol LVB for Ludwig van Beethoven until billionaire hedge fund manager John Paulson bought the company in 2013.
“As administrator of Steinway, John Paulson has focused on investing in our business, including technology, in-house showrooms, our manufacturing processes and machinery, and training our workforce to create a stronger team,” the filing reads .
‘Established, profitable company.’ Is the timing right?
Goldman Sachs, Bank of America Securities and Barclays are the joint lead bookrunning managers and agents for the proposed offering.
But is now the right time to go public?
A report by auditing firm EY last month said the IPO market has experienced a significant slowdown from 2021, driven by factors including rising geopolitical tensions, volatility in stock markets and concerns about rising commodity and energy prices.
EY said there was also a significant drop in SPAC IPOs, as well as cross-border, unicorn and mega IPOs, which are those with proceeds in excess of $1 billion.
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“The IPO market has gone from remarkably hot to remarkably cold since the new year,” said Jay Ritter, a professor at the University of Florida’s Warrington College of Business.
Ritter said that 2021 was by far the most active IPO market in the US since 2000. However, only six IPOs were launched this year, raising more than $100 million.
“Steinway Musical Instruments Holdings is an established, profitable company with annual sales of $538 million and 2021 after-tax income of $59.2 million,” he said. “It will have no trouble finding IPO investors with a valuation above $1 billion.”
tradition and innovation
Innovation proves to be a source of revenue as Steinway introduces technologies that Henry Engelhard Steinway could never have imagined.
In 2015, the company introduced the Spirio Player Piano, which features recorded performances by renowned pianists.
Spirio | r, launched in 2019, enables recording and high-resolution editing in addition to playback.
Last year, the company introduced Spiriocast, which makes it possible to broadcast live performances synchronously 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, accounting for approximately 32% of the company’s net sales in the piano segment in 2021.
Critical new market
Steinway also looks to China because of “an ingrained reverence for classical music, particularly piano music, and a sizeable and rapidly expanding middle and upper class with an appetite for Western luxuries.”
China is the largest global 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 are taking piano lessons in China, compared to fewer than 10 million in the rest of the world, “suggesting that the majority of the world’s children playing the piano live in China.”
“Despite the spread of piano playing in China and our brand strength in the region, we have historically had under-penetration in the country, selling about half as many Steinway grands in China as we do in the US market,” the filing reads.
As China continues to develop and accumulate wealth, Steinway said it will “seek to capture growing consumer demand for ultra-premium pianos.”
“Over the past 20 years, we have transformed our business in China to sell more pianos to consumers rather than institutions,” the company said.
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