China-based music streaming company Tencent Music Entertainment Group has raised close to US$1.1 billion in its US initial public offering (IPO) after pricing its shares at the bottom of its targeted range, Reuters reports, citing two sources.
The music arm of gaming and social network giant Tencent Holdings Ltd. (00700.HK) priced its American Depositary Receipts (ADRs) at IS$13 per share, at the low end of its indicated US$13 to US$15 per share range.
The IPO values Tencent Music at US$21.3 billion, and shows how companies are defying a bout of market volatility with flotations.
Tencent Music sold 41 million ADRs while existing shareholders sold a further 40.9 million, the source said, asking not to be identified ahead of an official announcement.
Tencent Music declined to comment.
Tencent Music’s IPO tops off a bumper year for US listings by Chinese companies, with US$7.9 billion raised prior to Tencent Music’s debut, Refinitiv data showed.
That is the highest amount since 2014, the year of Alibaba Group Holding Ltd.’s record US$25 billion offering.
Tencent Music’s US IPO is the fourth largest among Chinese firms this year by deal value. Video streaming company iQiyi Inc. leads with its US$2.4 billion listing, followed by online group discounter Pinduoduo Inc. at US$1.6 billion and electric vehicle maker NIO Inc. at US$1.15 billion.
Returns for investors have been mixed, with the 31 Chinese IPOs in 2018 down an average of around 11 percent as of Dec. 10, according to data provider Dealogic.
With streaming apps QQ Music, KuGou, Kuwo as well as karaoke app We Sing, Tencent Music is China’s largest online music platform boasting more than 800 million monthly active users. The firm is often compared with Spotify Technology SA, but offers more socially interactive services that make it profitable while its Swedish counterpart is not.
Tencent Music initially planned to launch the deal in October, but postponed because of a sell-off in global markets roiled by a US-China trade war and fears of slowing global growth.
The company reported a 244 percent profit jump for January-September to US$394 million. By comparison, Spotify lost a net US$520 million.
Morgan Stanley, Bank of America, Deutsche Bank, Goldman Sachs and JPMorgan are the lead sponsors of the deal.
Tencent Music was due to begin trading on the New York Stock Exchange on Wednesday under the symbol “TME”.
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