Tencent Music presses pause on $2bn US listing

Hong Kong — Tencent Music Entertainment has delayed its planned US initial public offering (IPO) until at least November, to wait for global stock markets to stabilise, three sources said.

The music arm of tech giant Tencent, owner of China’s most popular music apps, is expected to raise at least $2bn and was originally planning to launch its offering as soon as next week, the sources said.

However, Wall Street on Wednesday suffered its worst one-day drop in eight months, with the S&P 500 down 3.29%. The index dropped a further 2.06% on Thursday.

“Are they really going to launch into this window?” asked one source involved in the deal, adding that the company had plenty of cash. “Why try and jam something out now?”

Chinese shares have also fallen, with the CSI 300 index of mainland Chinese blue-chips down 4.8% to a 27-month low on Thursday.

“Given the recent challenging market conditions, it won’t be a good idea for the company to go ahead with the listing timetable. It makes more sense to wait till the market recovers a bit,” said another person with knowledge of the matter.

Tencent Music declined to comment. The sources declined to be identified as the information was not public.

At $2bn, the IPO would be one of the largest by a Chinese company in the US this year, behind the $2.4bn raised by video streaming company iQiyi in March but ahead of the $1.6bn raised by online group discounter Pinduoduo in July.

In total, Chinese companies have raised $7.5bn from US markets so far this year — the biggest amount since 2014 — according to Refinitiv data.

Tencent Music filed for its IPO earlier this month, setting a placeholder sum of $1bn for registration purposes.

The company owns streaming apps QQ Music, Kugou and Kuwo, as well as karaoke app WeSing, and claims more than 800-million monthly active users.

The number of Tencent Music shares to be sold was not disclosed and potential valuations were unclear. Its Swedish music streaming counterpart, Spotify Technology, is valued at about $27.1bn.

The Chinese company, which has a cross-shareholding deal with Spotify, offers more in the way of socially interactive services that makes it profitable, while the Swedish firm is not.

Tencent Music reported a 92% jump in sales in the first half of this year and net profit of $263m.

Reuters