HONG KONG (Reuters) – Tencent Music Entertainment, which owns China’s hottest music apps, has filed for a U.S. IPO in search of funds to develop content material and new companies, in what is anticipated to be one of many largest U.S. listings by a Chinese firm this yr.
FILE PHOTO: A Tencent signal is seen in the course of the fourth World Internet Conference in Wuzhen, Zhejiang province, China, December four, 2017. REUTERS/Aly Song/File Photo
The music arm of tech large Tencent Holdings (0700.HK), which plans a Nasdaq itemizing, set a placeholder quantity of $1 billion for registration functions. Sources mentioned final month it hoped to lift $2 billion.
With streaming apps QQ Music, Kugou, Kuwo in addition to karaoke app WeSing, Tencent Music is China’s largest on-line music platform boasting greater than 800 million month-to-month lively customers.
It is commonly in comparison with Spotify Technology SA (SPOT.N), however the Chinese agency gives extra in the best way of socially interactive companies that makes it worthwhile whereas its Swedish counterpart will not be.
Music-centric social leisure companies, which embrace digital presents and premium memberships, accounted for simply over 70 % of the $1.65 billion in revenue it made in 2017, its submitting with the U.S. Securities and Exchange Commission mentioned.
Profit after tax got here in at $199 million. The submitting additionally confirmed that solely three.6 % of Tencent Music customers pay for music.
For the primary half of this yr, revenue jumped 92 % to $1.three billion whereas income after tax climbed roughly fourfold to $263 million.
By comparability, Spotify, with which it has a cross shareholding deal, misplaced 90 million euros ($104 million) within the second quarter of this yr on revenue of 1.three billion euros.
The variety of Tencent Music shares to be offered weren’t disclosed and potential valuations had been unclear. Spotify is now valued at $31 billion, with shares gaining about eight % since its U.S. debut in April.
Chinese corporations have raised $7.5 billion in U.S. markets up to now this yr, the largest quantity since 2014, in accordance with Refinitiv knowledge.
These embrace video streaming firm iQiyi (IQ.O), which raised $2.four billion, electrical car startup Nio Inc (NIO.N) which raised $1 billion, and on-line group discounter Pinduoduo (PDD.O) which raised $1.63 billion.
Tencent Music’s IPO comes as the worldwide music business will get again on observe with extra listeners streaming music by way of smartphone apps in contrast to some years in the past when the market was dominated by pirated music.
Its apps have over 20 million tracks from each worldwide and home music labels, the submitting mentioned, whereas hundreds of thousands of customers go to the karaoke app WeSing every day.
WeSing permits individuals to have karaoke events in digital singing rooms, problem one another in sing-offs and sing duets with celebrities or different customers.
Bank of America, Deutsche Bank, Goldman Sachs, JPMorgan and Morgan Stanley are the lead sponsors of the deal.
Reporting by Julia Fioretti in Hong Kong; Additional reporting by Aparajita Saxena and Diptendu Lahiri in Bengaluru; Editing by Edwina Gibbs