Tencent Music Is Planning a Second IPO Valued at $3.5 Billion

Tencent Music IPO Launches at Lowest Expected Price Range

Tencent Music, which operates the QQ Music, Kugou Music, and Kuwo Music streaming services (as well as the WeSing karaoke app) in China, is reportedly planning a second, $3.5 billion IPO.

Higher-ups at the Shenzhen-headquartered Tencent Music, which is traded as TME in the States, are currently in talks to roll out the multibillion-dollar second IPO in Hong Kong, according to a report from Nikkei Asia. Neither a specific date nor a general timetable has yet been established for the stock-market listing, per the same source, which the Tencent subsidiary is reportedly considering due to ongoing concerns over being delisted from the New York Stock Exchange (NYSE).

At the time of this piece’s publishing, Tencent Music officials hadn’t commented publicly on the potential Hong Kong IPO, which is possible because of a rule implemented late last year. The measure expanded the listing eligibility of Chinese companies that have made shares available in foreign markets. On the day, Tencent Music’s per-share price grew 2.6 percent, to a near-record of $21.70.

Also worth noting is that Hangzhou-based NetEase, a main Tencent competitor and the developer behind the Chinese editions of World of Warcraft and Minecraft, announced over the summer that it would debut a $2.7 billion Hong Kong stock offering of its own. In the United States, the 24-year-old NetEase’s stock is bought and sold under the symbol NTES.

And even as Treasury Secretary Steven Mnuchin warned that China-headquartered companies “will be delisted on the [stock] exchanges” if they fail to abide by American accounting standards, Tencent Music closed a multitude of high-profile deals in 2020.

Agreements with Universal Music Group (UMG), indie music publisher Peermusic, GMM (Thailand’s largest media conglomerate), Kobalt Music Group, Japanese animation film studio CoMix Wave Films, and Merlin, came to fruition for Tencent Music in 2020. Plus, the entity quietly acquired over five percent of Warner Music Group’s Class A shares – an investment that, along with a stake taken by another Tencent subsidiary, gives the overarching conglomerate a 1.6 percent interest in WMG as a whole.

On the financial side, Tencent Music experienced a 46 percent year-over-year increase in paid subscribers during 2020’s third quarter, according to the corresponding earnings report. This represents the company’s largest increase in quarterly users since its 2016 founding, with some 51.7 million paid users across the initially mentioned QQ Music, Kugou Music, Kuwo, and WeSing.

Tencent Music’s Q3 revenues cracked $1.14 billion, per the performance analysis – a 16 percent boost from the same period in 2019.