Tencent Music Entertainment to Trade on U.S. Stock Exchange

Chinese media company, Tencent, confirmed that Tencent Music Entertainment (TME) is set to be spun-off through a public listing in the U.S. Tencent is a majority shareholder in TME and told its shareholders, on Sunday, that the music company would be on a “recognized stock exchange in the United States through a registered public offering, and that the Stock Exchange has confirmed that the Company may proceed with the Proposed Spin-off.”

Tencent prepared for this transaction by submitting a proposal to the Stock Exchange of Hong Kong, before confirming that the Company can proceed with the proposed spin-off. The terms for the spin-off, like its “offering size, price range and assured entitlement of Tencent Music securities for shareholders of the Company, have not yet been finalized.” It also has yet to receive “approval(s) from the relevant authorities in respect of the listing of, and permission to deal in, securities of Tencent Music, and the final decisions of the Board of the Company and the board of directors of Tencent Music.”

TME is expected to reach a public valuation of about USD 30 Billion after its IPO in the U.S. according to a news report last week underwritten by Goldman Sachs and Morgan Stanley.

TME owns music services QQ Music, Kuwo and KuGou in China, aiding China in entering the Top 10 largest recorded music markets last year. China generated USD 292.3 Million for labels and artists up 35.3% on the previous year, according to IFPI figures.

In December 2017, Tencent had a 9.1% stake in Spotify with a quarter of it owned by TME. As part of the stock swap, Spotify had control of an equity interest of about 9% in TME.

Sony Music Entertainment COO, Kevin Kelleher, said, “We think in five years China could be a Top 5 market. Tencent, which is a major player in that marketplace, has 700 Million plus people using their music service(s) every month, with 25 Million paying subscribers.”

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