Tencent Music shares surged as much as 13.5 percent in their US trading debut on Wednesday as investors shrugged off volatile markets and sought a piece of the Chinese music streaming giant.
The stock opened at US$14.10, or 8.5 percent above its initial public offering price of US$13, after the company priced the shares at the lower end of a marketed range, Reuters reports.
After some intra-day swings, the new listing eventually closed at US$14, ending with a decent gain of 7.7 percent.
That gave the Tencent unit a valuation of about US$22.9 billion, putting it just below Swedish peer Spotify Technology, which was worth US$23.25 billion as of Wednesday close.
Tencent Music Entertainment raised US$1.1 billion in in its IPO after pricing the stock at the lower end of a US$13-15 marketed range.
The debut marks an end to a tumultuous listing journey that saw the company delay its IPO plans until November in a market weakened by trade tensions between the United States and China.
“We are very proud to be able to complete the IPO despite the challenging market,” Chief Strategy Officer Tony Yip told Reuters in a telephone interview. “Raising over one billion dollars in this type environment is not an easy task.”
Tencent Music launched its hotly anticipated IPO a day after US and Chinese leaders brokered a 90-day truce in their trade conflict last week.
“If this (Tencent Music’s) IPO came out at a different time, without the geopolitical risk that is currently in the market, we would have seen a much different result in terms of Tencent Music’s pricing,” Reuters quoted Jeff Zell, senior research analyst and partner at IPO Boutique, an IPO tracking firm, as saying.
Tencent Music claims more than 800 million monthly active users and offers online music, online karaoke and music-centric live streaming services. It said it has a music content library with over 20 million tracks as of end-September.
Online music services contributed about 30 percent to its total revenue in the first nine months of 2018.
According to the firm, music-centric social entertainment services, which include virtual gifts and premium memberships, accounted for more than 70 percent of the US$1.65 billion revenue it posted in 2017.
The company, whose controlling shareholder is Chinese internet giant Tencent Holdings, counts Spotify among its investors.
According to the report, Tencent Music’s profit more than tripled to US$394 million in the nine months to September, while Spotify posted a net loss of US$520 million over the same period.
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