Tencent Music plans to raise US$1.2 billion in IPO

Tencent Holdings’ subsidiary Tencent Music is planning to raise as much as US$1.23 billion from its New York Initial Public Offering (IPO), the firm said in a regulatory filing with the United States (US) Securities and Exchange Commission on Monday.

In the regulatory filing, Tencent Music said it plans to raise between US$1.07 billion and US$1.23 billion through the IPO. The amount is a step down from the US$2.00 billion the firm was reportedly seeking to raise previously.

The firm plans to sell 82 million American depositary shares priced at between US$13.00 and US$15.00 each. A further 12.3 million shares could be offered through an over-allotment option. Tencent Music will be listed on the New York Stock Exchange under the ticker TME.

Tencent Music to list after US-China trade tensions take a temporary truce

Although the filing did not state the trading debut date, sources have told media reports the firm has plans to start trading on December 12. The firm wanted to launch its IPO process after the G20 summit.

The uncertainties caused by the trade tensions between US and China had added volatility to the market and Tencent Music was waiting for an opportune time to IPO in case the trade dispute takes a bad turn in future.

Last month, the firm was reported to be gunning for a US IPO in December. This follows news on the company postponing its IPO plans in October due to the selloff in global markets that month. Tencent owns 58% of Tencent Music while US’ Spotify owns a 9% stake.

This year, Chinese firms have raised a total of US$7.90 billion through US IPOs. Including Tencent Music’s listing, Chinese firms will have raised in total close to US$9.00 billion in IPOs.

Soon to be third largest Chinese IPO in the US in 2018

Tencent Music's US$1.2 billion IPO would make it the third largest Chinese IPO in the US for this year, following social shopping platform Pinduoduo’s US$1.6 billion and video streaming platform iQiyi’s US$2.3 billion.

Tencent Music runs streaming apps QQ Music, Kugou, Kuwo as well as karaoke app WeSing. Its business model blends music streaming, video content, and social media and it owns around three-quarters of China’s music streaming market and claims to have more than 800 million monthly active users.

The firm is targeting for a valuation of between US$22 billion and US$25 billion, according to Reuters. That amount would make it on par with Spotify’s market value of US$24.3 billion.

Tencent’s shares rose 0.74% or HK$2.40, at HK$327.20, at 3.57pm Hong Kong time.