Tencent Music and Entertainment (TME), a spin off from Tencent, a Chinese internet conglomerate, has taken steps forward towards a highly anticipated initial public offering in New York, according to Financial Times, shortly after the successful listing of Spotify, a Swedish streaming giant, in early April this year.
The music spinoff is a dominant leader in the music streaming industry in China, and has relied on its market power to outbid rivals for distribution agreements with western labels. In 2017, it accounted for 78% of China’s music revenue, according to Soochow Security, a Chinese brokerage.
According to the same Financial Times article, Tencent’s music unit has tapped bankers including Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch to lead the IPO. The bankers expect this IPO to be worth in excess of US$30 billion, making it potentially one of the largest IPOs in 2018. Previous media reports pegged its IPO size at $25 billion.
Despite the recent hype with the Hong Kong bourse acceptance of a dual-class shares structure, TME still chose to list in New York as HKEX only accepts such a structure under the control of a company’s founder rather than outside institutional investors.