Tencent Music

Chinese Music Streamer Tencent Music Entertainment Files For US IPO, Warner & Sony To Buy In

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NEW YORK (CelebrityAccess) — Chinese music streaming giant Tencent Music Entertainment Group officially filed its paperwork with the Securities and Exchange Commission on Tuesday for an initial public offering.

While the filing did not list a specific exchange for the IPO, the Wall Street Journal reported that people familiar with the filing said it mentioned both the New York Stock Exchange and the Nasdaq Global Market.

TMEG, part of the e-commerce behemoth Tencent’s family of companies, is the largest streaming music provider in China when measured by user base.

The company operates four different streaming services, including the popular app QQ Music, which Tencent recently said had 800 million unique monthly active users.

Tencent also revealed that on October 1st, they entered into share subscription agreements with local affiliates of both Warner Music and Sony. The agreement will see Tencent issue 68.1 million shares in exchange for an investment of approximately $200 million when the IPO goes live.

Under the agreements, all shares held by Warner and certain shares held by Sony will be subject to a lock-up that will expire upon the earlier of the third anniversary of the completion of this offering or October 1, 2021, subject to limited exceptions.

“We believe that such transactions will help deepen our strategic cooperation with our major music label partners and better align our interests with theirs to create long-term value for our users and shareholders. We expect to record a share-based accounting charge upon the consummation of such share issuances in an amount equal to the excess of the fair value of the ordinary shares sold over the aggregate consideration to be received by us,” Tencent said in the filing.

According to the Wall Street Journal, the company’s IPO is expected to be the largest formal initial offering for 2018 and likely the largest tech IPO in history, with a potential valuation of more than $25 billion.

Tencent’s filings revealed that the company has grown revenue by 92% to the equivalent of $1.3 billion in the first six months of the year when compared to the same period in 2017.

It posted a 2017 profit of $199 million, which is up precipitously from the roughly $2 million of profit the company posted in 2016. Earnings per share climbed 273% over that period, to an equivalent of 8 cents.

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