Tencent Music Delays IPO in Wake of Global Market Jitters

Expected to be one of the largest IPOs in the U.S. this year, Tencent Music filed with the Securities and Exchange Commission on Oct. 2 for a $1 billion offering.

CapitalWatch Staff
    Oct 11, 2018 5:44 PM  PT
Tencent Music Delays IPO in Wake of Global Market Jitters
author: CapitalWatch Staff   

Tencent Music Entertainment Group, which operates China's biggest music streaming apps, has decided to delay its initial public offering in New York in the wake of the recent global decline in the stock market.

The company, part of Chinese tech conglomerate Tencent Holdings Ltd. (HKEX: 0700), had expected to launch a roadshow for investors next week and complete its IPO by the end of October. but it has put off any decision pending discussions with its underwriters, according to a report in The Wall Street Journal, which cited unnamed sources.

Expected to be one of the largest IPOs in the U.S. this year, Tencent Music filed with the Securities and Exchange Commission on Oct. 2 for a $1 billion offering, though some observers expect that to increase to $2 billion by the time the shares are issued. If successful at that level, the IPO would value the company at about $30 billion.

According to the Journal, the company met with its underwriters this week to discuss the price range for its shares, but given the plunge in global markets, the parties decided to wait. After two days during which the Dow Jones Industrial Average has fallen nearly 1,400 points, the index is down more than 5 percent this week.

Tencent Music was formed in 2016 when its parent purchased China Music Corp., the owner of Kugou and Kuwo, for $2.7 billion. China Music subsequently merged with QQ Music, a music platform Tencent launched in 2003. WeSing, Tencent's online social karaoke platform, began operating in 2014.

In the second quarter this year, Tencent Music had more than 800 million monthly active users across its four apps, with each daily user spending on average of 70 minutes per day. The company boasts China's most comprehensive music library in audio and video. In addition, users can share recordings of their own signing, stream music performances, and comment on other users' posts.

For the six months through June, TME reported revenue of $1.3 billion, nearly double the same period a year ago. Its profit during the same period reached $263 million, up 341 percent from the first half of 2017.

Upon the completion of TME's IPO in New York, Tencent Holdings would remain the company's controlling shareholder.

Tencent Music expects to trade on the Nasdaq Global Market under the ticker symbol "TME."

Underwriters include several of the biggest players in the industry, including J.P. Morgan Securities LLC, China International Capital Corporation Hong Kong Securities Ltd., Merrill Lynch, Pierce, Fenner & Smith Inc., Deutsche Bank Securities Inc., Goldman Sachs (Asia) LLC, Morgan Stanley & Co. LLC, China Renaissance Securities (Hong Kong) Ltd., Stifel, Nicolaus & Company Inc., Allen & Company LLC, KeyBanc Capital Markets Inc., BOCI Asia Ltd., and HSBC Securities (USA) Inc. 

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