Tencent isn’t planning on making $3bn investment in Universal by itself – report

Tencent Holdings Ltd is moving ahead with its $3.3bn acquisition of 10% of Universal Music Group, according to sources – but it’s not going it alone.

Bloomberg reported Friday (November 15) – citing sources with knowledge of the matter – that Chinese media giant Tencent is currently in talks with potential outside investors in order to form a consortium to complete its mooted buyout of a minority stake in UMG.

Those potential investors include Hillhouse Capital and Singapore’s sovereign wealth fund GIC Pte.

According to sources, Tencent intends to raise €1bn ($1.1bn) in debt to help fund the €3bn ($3.3bn) UMG deal, with the remaining circa-$2bn likely being funded in equity.

Bloomberg reports that Tencent has “a goal to carry out the purchase within the next few months”, and that it may enlist further minority investors to help buy up to 20% of UMG.

Vivendi announced in August that it was in talks with Tencent, with the latter set to acquire 10% of UMG.

Vivendi also confirmed that Tencent  had a one-year call option to acquire an additional 10% of the music company at the same price and terms.

Vivendi, which reserves the right to sell additional minority stakes in Universal to other parties, told investors in October: “[There is a] continuing process for the potential sale of an additional minority stake in UMG to other partners. Some have already expressed an interest in investing at a similar price level.”

Tencent Holdings is the majority-owner of Tencent Music Entertainment (TME), the owner of China’s biggest digital music services such as QQ Music, Kuwo and KuGou.

Last week, TME confirmed that it recently made Taylor Swift’s latest album, Lover, a promotional priority on its platforms – helping showcase the firepower the company can offer an artist from outside China.

“International artists enjoy and benefit from our promotional capabilities, which allow them to connect with music lovers in China,” said TME CEO Cussion Pang. “A case in point, the title song of Taylor Swift’s new digital album, Lover, sold nearly 6 million copies [in China] within 24 hours on our platform after release.”

Universal Music Group, via Republic Records, is Taylor Swift’s global recorded music partner.Music Business Worldwide

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