Morgan Stanley Massively Increases Its Tencent Music Holdings to Nearly 100 Million Shares

Tencent Music IPO Launches at Lowest Expected Price Range
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Morgan Stanley has increased its stake in Tencent Music (traded as TME on the NYSE) to nearly 100 million shares.

The Manhattan-headquartered investment bank and financial services company recently shed light upon its substantial Tencent Music holdings in a Schedule 13G filing, an alternative to the Schedule 13D that must be submitted to the Securities and Exchange Commission (SEC) after an entity purchases five percent or more of a publicly traded company’s shares.

According to this document, Morgan Stanley now owns an aggregate total of 96,229,448 TME shares – up from 68.07 million shares as of September 30th, 2020, per Fintel. These shares represent 7.2 percent of Tencent Music itself.

Calculating based upon Tencent Music’s per-share price ($26.54) at the time of this piece’s publishing, Morgan Stanley’s massive investment is worth a staggering $2.55 billion or so. Moreover, the filing also indicates that the financial services powerhouse held the shares as of December 31st, when TME was worth about $19.24 per share.

Morgan Stanley’s multibillion-dollar Tencent Music stake – and the noteworthy stock-price growth that the company has enjoyed in the new year – appears indicative of the high hopes that some financial professionals have for China’s quick-growing music industry. To be sure, the entity, which operates the QQ Music, Kugou Music, and Kuwo Music streaming services, as well as the WeSing karaoke app, revealed record paid-subscriber growth in 2020’s third quarter.

Additionally, Tencent Music quarterly revenue jumped 16 percent year over year, to $1.14 billion, according to the earnings disclosure. And besides establishing a clear-cut presence in China’s entertainment space – the income potential of which was a point of ample debate in the not-so-distant past – the streaming company has taken several steps as of late to bolster its platforms, secure more capital, and, with the financial support of the overarching Tencent conglomerate, purchase interests in industry-leading companies.

Building upon the points, Tencent Music announced last month that it would spend $415 million to acquire Lazy Audio, a Chinese podcast, radio, and audiobook platform. News of the sizable purchase broke just after reports specified that the Tencent subsidiary would move forward with a multibillion-dollar Hong Kong IPO.

Though this second listing isn’t yet set in stone, more recent updates suggest that Tencent Music is setting the stage for a $5 billion Hong Kong IPO sometime this year; JPMorgan Chase and Morgan Stanley, for their part, are reportedly leading the offering.

Finally, Tencent (and a consortium of other investors, including Tencent Music itself) has increased its ownership of Universal Music Group to 20 percent ahead of the Big Three record label’s own stock-market debut.