Mike Snider

USA TODAY

Music streaming service Spotify has gotten a $1 billion injection of funds that can eventually be converted into stock.

If Spotify has an IPO within the next year, the investors -- private-equity firm TPG, hedge fund Dragoneer Investment Group and clients of Goldman Sachs Group Inc. -- can convert the debt into public shares at a 20% discount, persons familiar to the situation told USA TODAY. The Wall Street Journal first reported the deal Wednesday.

Spotify expects to go public within the next two years. Should the IPO hit more than a year from now, the discount rate increases by 2.5 percentage points every six months. The deal is expected to close at the end of this week.

"At TPG, we have a long history of supporting innovative companies, such as Airbnb, CAA and Uber, that are redefining the industries in which they operate,” said TPG partner David Trujillo said in a comment sent via email. “As content consumption continues to evolve, (Spotify CEO and founder) Daniel Ek and his team are well-positioned to build the leading marketplace for consumers, artists and the music industry at large. This financing gives them the strategic resources to further strengthen their leadership position."

A round of funding in June 2015 brought the streaming service $526 million and at the time Spotify was valued at $8.5 billion. Spotify says it currently has more than 30 million paying subscribers and more than 75 million active users.

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