Chinese media giant Tencent has confirmed that Tencent Music Entertainment (TME) is set to be spun-off via a public listing in the United States.
Tencent is the current majority shareholder in TME, and today (July 8) told its shareholders that the music company would now float on a “a recognized stock exchange in the United States through a registered public offering”.
In preparation for this float, Tencent has submitted a proposal to the Stock Exchange of Hong Kong, which has since confirmed that Tencent can proceed with the proposed spin-off.
According to Tencent: “The terms of the Proposed Spin-off, including offering size, price range and assured entitlement of Tencent Music securities for shareholders of the Company, have not yet been finalized.”
It further qualified: “The Proposed Spin-off is subject to, among other things, the obtaining of 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.”
According to a news report out of China last week, TME is expected to nail a public valuation of around $30bn after its IPO in the US – with the process underwritten by Goldman Sachs and Morgan Stanley.
Tencent Music owns digital music services QQ Music, Kuwo and KuGou in China.
China entered the Top 10 biggest recorded music markets last year.
The nation generated $292.3m for labels and artists, according to IFPI figures, up 35.3% on the prior year.
In May, Sony Music Entertainment COO, Kevin Kelleher, told investors: “We think in five years China could be a Top 5 market.
“Tencent, which is a major player in that marketplace, has 700m+ people using their music service[s] every month, with 25m paying subscribers.
“They’ve got great ambitions, as have some other companies.”
In December last year, Tencent took control of a 9.1% stake in Spotify – of which, around a quarter was directly owned by TME.
In return, as part of a stock swap, Spotify took control of a non-controlling equity interest of approximately 9% in Tencent Music Entertainment.Music Business Worldwide