Tencent Music hits a pause on its IPO play amid global market selloff

Tencent Holdings’ subsidiary Tencent Music is said to have postponed its initial public offering (IPO) until at least November, due to the ongoing selloff in global markets.

Tencent Music had last week met with its underwriting team to set a listing price for the IPO, but it subsequently decided to hit the pause button on the IPO over worries that the market condition could affect the pricing, according to reports from The Wall Street Journal and Reuters late Friday evening, which cited sources familiar to the IPO listing.

Last week, United States’ (US) Wall Street suffered its worst single-day drop in eight months on Wednesday as it shrank 3.29%, and then slumped further falling by 2.06% on Thursday. The International Monetary Fund had earlier in the week downgraded its global economic growth predictions for this year and next year, pointing out that the trade war between the two largest economies - the US and China - is taking a toll on global growth.

The turmoil in the markets continued on for this week. Asian markets resumed its slide on Monday morning, with Japan’s Nikkei 225 shedding almost 2%, Singapore’s Straits Times Index down 0.27%, China’s Shanghai Composite Index lower by 0.04%, and Hong Kong’s Hang Seng Index also declining by 1.16% in the opening minutes.

Tencent Music plans to raise US$2 billion IPO

Earlier in September, the group was said to be seeking to raise US$2 billion in its US IPO. The subsidiary of Chinese tech giant Tencent had filed under confidentiality with the US Securities and Exchange Commission.

Tencent Music which is said to be expecting a valuation of between US$25 billion and US$30 billion through the share sale, was valued at US$12.5 billion late last year, after its deal with Spotify to swap shares.

The group which has a business model that blends music streaming, video content, and social media controls around three-quarters of China’s music streaming market, running music from Chinese and international artists on service providers such as KuGou, Kuwo and QQ Music. It claims to have more than 800 million monthly active users.

The trade dispute between the US and China has affected stock markets and company stock valuations, amongst other things. Tencent Music’s parent Tencent, has at its worst seen its stock wiped out by more than US$250 billion in market value from its January high. Tencent owns 58 percent of the music division.

Tencent Music's eventual listing would see it follow a string of Chinese tech companies that have listed on US markets, including online group discount service Pinduoduo.