Chinese internet giant Tencent is seeking to spin off its online music entertainment business and aim for an initial public offering in the US, according to a stock filing to the Hong Kong stock exchange [1]on Sunday, where Tencent trades its shares.
Details of the spin-off, including offering size, price range, and assured entitlement of Tencent Music securities for shareholders of Tencent, have not yet been finalised, according to the Shenzhen-based company, adding that it will make further announcements when it is appropriate.
Tencent owns a 62 percent stake in Tencent Music Entertainment. In the meanwhile, Spotify owns 9 percent of Tencent Music, and Tencent owns 7.5 percent of Spotify following a share swap last year, according to media reports.
Tencent Music Entertainment has hired Goldman Sachs, Morgan Stanley, and Bank of America Merrill Lynch to lead the IPO and expects its valuation to exceed $30 billion, Financial Times reported in May[2], quoting people familiar with the matter.
Tencent, whose popular messaging app WeChat has topped 1 billion active users, is also leading the music streaming market in China, as its three popular platforms, QQ Music, Kugou, and Kuo, own a combined 76 percent shares of the Chinese music streaming market with over 600 million monthly active users (MAUs), according to research firm DCCI.[3]
Tencent Music has outstripped the other two music streaming platforms in China, owned by Alibaba and NetEase, and has more than 17 million music resources in its library. It has also signed up contracts with a number of music companies such as Universal, Warner, and Sony for their exclusive music rights in China, making it the largest music rights owner and distributor in the country.
But the