China's Kuke Music Hopes for Warm Wall Street Welcome Next Friday

Music licensing services provider Kuke Music might serve as the barometer for Chinese IPOs in what are still tense times.
CapitalWatch StaffJan 07,2021,21:52

Kuke Music Holding Ltd. prepares to lift off in its initial public offering on Wall Street next week, raising up to $60 million.

The company, China's largest provider of classical music licensing services, is scheduled to float on Friday, Jan. 15, selling 5 million American depositary shares at $10 to $12 per share.

The underwriters have an option to purchase up to 750,000 additional ADSs upon the offering. Underwriters are Deutsche Bank Securities Inc., US Tiger Securities Inc., AMTD Global Markets Ltd., China Securities (International) Corporate Finance Co. Ltd., and Valuable Capital Ltd.

The company said in its prospectus that a number of institutional investors, including existing shareholders, namely Huaqiang Capital’s Da Hua Group Hong Kong Investments, Eichent Ltd., and CITIC Capital Holdings, have indicated interest in acquiring up to an aggregate $26 million of Kuke’s ADSs in the IPO.

Operating since 2002, Kuke provides licensing services to some of China’s top online music entertainment platforms, as well as music labels and publishers, film and TV production companies, airlines and smart hardware companies. Among its partners are Tencent Music Entertainment Group (NYSE: TME) and NetEase Cloud Music.

In addition, Kuke provides smart music education solutions, specifically, smart pianos and teaching systems, and runs live classical music events, according to its filing with the U.S. SEC on Friday.

For the nine months through September 2020, Kuke posted revenue of $5 million, a decrease of 14.6% year-over-year, and a loss of $8.5 million. Music licensing and subscription generated 86.6% of the total revenue in the first three quarters of 2020, according to the filing.

The Beijing-based company filed for a listing in New York in mid-December and has propelled toward the IPO despite the high volatility of the markets amid Sino-American tensions and political unrest, as well as the continued uncertainty for Chinese U.S.-listed firms. On Dec. 18, President Donald Trump signed the Holding Foreign Companies Accountable Act that requires foreign firms to adhere to PCAOB auditing within three years or face delisting.

Kuke Music expects to lift off on the New York Stock Exchange under the symbol "KUKE."

Topics:kuke, ipo
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