In 1853, Franklin Pierce became President of the U.S., Washington became a territory and Levi Strauss started his clothing and dry-goods business in San Francisco.
In 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, who went by Steinweg back then, had a simple goal: “To build the best piano possible."
'No Way But Steinway'
The company has grown dramatically since those early days, and the list of artists who have used Steinway pianos range from Irving Berlin and Cole Porter to Sergei Rachmaninoff to Diana Krall and Billy Joel.
"If I am to play my best, there is no way but Steinway," pianist Lang Lang once said.
Now, Steinway Musical Instruments Holdings has filed with the Securities and Exchange Commission to list its stock 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 across the globe during the 2018-2019 concert season," the company said in its filing.
Steinway first went public in 1996, trading under the ticker symbol LVB for Ludwig van Beethoven, until billionaire hedge-fund manager John Paulson bought the company in 2013.
"As a custodian of Steinway, John Paulson has focused on investing in our business, including in technology, company-owned showrooms, our manufacturing processes and machinery, and in training our workforce to create a stronger team," the filing said.
'Established, Profitable Company.' Is Timing Right?
Goldman Sachs, Bank of America Securities and Barclays are the joint lead bookrunning managers and representatives for the proposed offering.
But is this the right time for an IPO?
A report last month by the accounting firm EY found said the IPO market has seen a significant slowdown from 2021, due to factors such as a rise in geopolitical tensions, stock-market volatility, and concerns about rising commodity and energy prices.
Steinway
EY said there was also there was a considerable fall in SPAC IPOs, as well as cross-border, unicorn and mega IPOs, which are those with proceeds above $1 billion.
"The IPO market has gone from remarkably hot to remarkably cold since the turn of the year," said Jay Ritter, professor at the University of Florida's Warrington College of Business.
Ritter said that 2021 was the most active IPO market in the U.S. since 2000, by a wide margin. However, only six IPOs raised more than $100 million have launched this year.
"Steinway Musical Instruments Holdings is an established, profitable company 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 is proving to be one source of revenue, as Steinway introduces technology that Henry Engelhard Steinway could never imagine.
In 2015 the company introduced the Spirio player piano, which features recorded performances by renowned pianists.
Spirio | r, introduced in 2019, enables recording and high-resolution editing in addition to playback.
Last year, the company introduced Spiriocast, which enables performances to be streamed live, 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 compounded annual rate of more than 30% from 2016 through 2021 and represented about 32% of the company's piano-segment net sales in 2021.
Critically Important New Market
Steinway is also looking toward China, due to "a deep-rooted reverence for classical music, specifically piano music, and a sizeable and rapidly expanding middle and upper class with an appetite for luxury Western products."
China is the largest global market for pianos and has about 40 million practicing pianists, the company said. That's roughly seven times the number of practicing pianists in the U.S.
Steinway said that about 30 million children in China are taking piano lessons, compared with fewer than 10 million in the rest of the world, "suggesting that the majority of children playing the piano globally are in China."
"Despite the prevalence of piano playing in China and our brand strength in the region, we have historically been under-penetrated in the country, selling approximately half as many Steinway grand pianos in China as in the U.S. market," the filing said.
As China continues to develop and accumulate wealth, Steinway said it "will seek to capture the growing demand for ultra-premium pianos by private customers."
"Over the last 20 years, we have transformed our business in China to sell more pianos to private customers rather than institutions," the company said.
