Spotify Is Poised to Make Another $3 Billion — Thanks to Tencent Music’s Upcoming IPO

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Tencent Holdings had been reportedly planning for a Tencent Music IPO.  Now, it looks like those plans will officially go forth.

After a strategic alliance was formed with Spotify last year, Tencent will attempt to follow in the footsteps of its western partner. With a Wall Street IPO, investors can now place their bets on the streaming music industry in China, which seems to be booming just like it is within the US and Europe.

According to Bloomberg, Tencent Holdings Ltd. will spin-off their online music business as an IPO in the United States.  The company filed with the Hong Kong stock exchange on Sunday, but is still working out the full details for their spinoff.

If Spotify’s ultra-successful public offering is a prequel, Tencent is likely to profit handsomely on their coming out.

QQ Music, Kugou, and Kuwo are among the music streaming services that operate under Tencent in Asia.  It’s mentioned that these music platforms have helped US artists like Rihanna and Katy Perry to reach more Chinese listeners.  Tencent Music has also worked for “homegrown artists” such as Joker Xue or Jason Zhang , specifically in terms of helping them expand their listening base and popularity.

One of the advantages that the service has is that Tencent has worked with content partners and the Chinese government to ensure that licensed music is being streamed legally.

As mentioned, Tencent and Spotify made a strategic investment swap last December with roughly 10 percent invested into each another.

Since then, Spotify has gone public and is valued at roughly $31 billion in the market (depending on the day).  It’s believed that Tencent Music could have a valuation of over $30 billion.  Earlier, we reported that Goldman Sachs and Morgan Stanley will underwrite Tencent’s IPO, and that the valuation could be as much as $32 billion.

All of that could spell another windfall for Spotify — to the tune of $3 billion.

But even though the two companies share a lucrative partnership, they may soon be operating as staunch competitors.  Spotify is now expanding into certain regions in Southeast Asia, and the global marketplace will remain a battleground.

Still, the streaming music business is certainly a lucrative one at this point —with plenty of opportunities for both companies to succeed.