Tencent Music invites banks to pitch for role in up to $4 billion U.S. IPO: IFR

Tencent Music Entertainment Group, China’s largest music-streaming company, has invited investment banks to pitch next week for a role in a U.S. IPO worth up to $4 billion, IFR reported on Monday, citing people familiar with the plans.

The music arm of Chinese tech giant Tencent Holdings (0700.HK) plans to go public by the end of the year, in a deal which it could raise between $3 billion and $4 billion, IFR, a Thomson Reuters publication, reported.

A Tencent spokeswoman declined to comment on the IPO plans.

Tencent Music is seeking an IPO valuation of about $25 billion, according to IFR.

It was valued at around $12.3 billion in late 2017, when Europe’s Spotify Technology (SPOT.N) swapped a stake with it, according to IFR’s calculations based on disclosures in filings by Spotify. Under the agreement, Spotify owns about 9 percent of Tencent Music while Tencent Holdings owns a 7.5 percent stake in Spotify.

As of Friday, Spotify had a market capitalisation of $28.5 billion.

Tencent Music first started discussion with banks about its planned IPO late last year. Progress was slow as the company focused on the Spotify transaction and was exploring the possibility of a Hong Kong listing as the city’s exchange operator unveiled plans to encourage more tech companies to list in the city by loosening listing rules, reported IFR.

Tencent Music, however, has decided to go for a U.S. listing as Spotify is listed there and Hong Kong Exchanges and Clearing’s (HKEX) (0388.HK) newly introduced rules do not allow corporate entities to benefit from weighted voting rights for now, according to IFR.

HKEX will launch a separate consultation by July 31 this year to explore such option.