Tencent Music Aims To Raise $1.2bn In US Market Debut

Matthew Broersma,

The service aims for a valuation of $22bn to $31bn in New York, taking advantage of a temporary trade ceasefire between the US and China

Tencent Music Entertainment has reignited its ambitions to list on the New York Stock Exchange, where it hopes to raise up to $1.2 billion (£940m).

The Chinese group had initially planned to list in the US in mid-October, but scrapped those plans amid a trade war between the US and China and a steep selloff on world markets.

Tencent Music’s new plans follow the two countries’ agreement to put their trade battle on hold for 90 days.

The group, which is the music division of tech colossus Tencent Holdings, aims to raise between $1.07bn and $1.23bn, according to a securities filing.

China Chinese New Year dragon © sippakornShutterstockDecember launch

The streaming firm said it plans to sell 82 million American Depositary Receipts (ADRs) for between $13 and $15 each, with the option of selling an additional 12.3 million shares.

Reports had estimated that the earlier listing was aiming to raise $2bn, but Tencent Music never confirmed that figure.

The frm is planning to open its books on Tuesday and to begin trading on 12 December, Reuters reported, citing an unnamed source.

Tencent Music is reportedly targeting a valuation of between $22bn and $31bn, which is roughly on par with Spotify’s current valuation of $24.3bn.  It is seeking to trade under the symbol TME.

Spotify launched on the New York market in April at $26bn and since then its value has fluctuated amidst intense competition from Apple Music and others.

Unlike Spotify, Tencent Music turns a profit, mostly due to its offering of socially interactive services.

Tencent Music reported a 244 percent jump in profits in the first three quarters of this year, to $394m from from $114m during the same period in 2017.  Tencent Music’s total revenues for the period were roughly $2bn.

By contrast, Spotify declared a net loss of $520m for the first three quarters of 2018.

Chinese IPOs

This year’s US market launches by Chinese companies include video streaming company iQiyi, which raised $2.4bn in March, and online group discount firm Pinduoduo, which raised $1.6bn in July.

Chinese groups have raised $7.8bn from US flotations this year, according to Refinitiv.

Tencent Music operates streaming apps QQ Music, Kugou and Kuwo and karaoke app WeSing.

The company said it had 800 million total unique monthly active users in the third quarter, with the average user spending more than 70 minutes a day on the platform.

In July, Spotify said it had 180 million monthly active users worldwide and 83 million paying subscribers.