The 4% notes will convert to equity in the event of an initial public offering according to bank documents, though the music streaming company has not disclosed investment plans.

Spotify, the Sweden-based music streaming platform backed by telecommunications company TeliaSonera and beverage producer Coca-Cola, is looking to raise $500m in convertible debt financing, Svenska Dagbladet reported on Wednesday.

The company will offer 4% notes convertible to equity in the event of an initial public offering at a discount to the IPO price, according to bank documents. The discount will work out to 17.5% if Spotify floats in the next year and will drop by 2.5% in each year thereafter.

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