Tencent Music set to IPO in October, with expected $30bn valuation

Music’s next multi-billion-dollar IPO is on track to arrive before the end of October.

Numerous credible reports out of China are suggesting that Tencent Music Entertainment (TME) is preparing to go public in the United States on Thursday, October 18.

It is also expected that TME’s intention to float will be publicly declared in a filing with the US Securities and Exchange Commission (SEC) next Friday, September 7.

Tencent Music Entertainment, which is majority-owned by Chinese media giant Tencent, quietly began proceedings for a listing in the States in July.

In the past month-and-a-half, the China-born company has reportedly been answering a series of behind-the-scenes questions from the SEC.

Tencent Music is expected to float at a valuation of $29bn to $31bn, in a listing underwritten by Goldman Sachs and Morgan Stanley.

The Financial Times reported earlier this month that it is anticipated that TME’s listing will take place in New York – leaving the New York Stock Exchange or the NASDAQ as the most likely stock market candidates.

Tencent’s valuation has jumped up to circa $30bn after being valued at $11.5bn as recently as December.

One reason for that leap will have been the comparative performance of Spotify on the NYSE.

Spotify floated on April 3 in the US, and its market cap has risen by over 30% since – to $34.4bn as of today (August 27).

According to a report from earlier this month in The Information, Tencent Music’s turnover for 2018 is expected to end up at around half that of Spotify.

Daniel Ek’s company is forecast to turn over close to $6bn this calendar year.

Unlike Spotify, however, Tencent Music is profitable: TME generated approximately two billion yuan ($290 million) in net profit last year, according to the report.

Spotify posted a $1.4bn net loss in the same period, although around $1bn of this was due to financing charges.

Tencent Music Entertainment operates three digital music services: QQ Music, plus Kugou and Kuwo.

The three services had a combined 700 million monthly users in China as of September 2017, according to Tencent.

Tencent Music also runs karaoke app WeSing, which at the end of 2018 had more than 460 million registered users.

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 EntertainmentMusic Business Worldwide

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