NetEase’s music streaming unit, Cloud Village, targets US$453 million as it revives Hong Kong IPO shelved amid tech crackdown

Name: How China censors the internet
Uploaded: 2021-11-23T07:19:11.000Z
Duration: 2 min 33 s
Description: How China censors the internet

The music streaming subsidiary of NetEase is selling shares at HK$190 (US$24.38) to HK$220 apiece

Cornerstone investors NetEase, Sony Music and Orbis Investments have committed to buying a combined US$350 million of the shares

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NetEase, one of China’s largest internet companies and games publishers, owns 62.5 per cent of Cloud Village. Photo: Visual China Group via Getty Images

Georgina Lee

Published: 3:19pm, 23 Nov 2021Updated: 3:23pm, 23 Nov 2021

Cloud Village, the music streaming subsidiary of NetEase, is aiming to raise up to US$453 million in a revival of its Hong Kong initial public offering that was postponed in August amid a regulatory crack down on Chinese internet companies.

The Hangzhou-based company is selling a total of 16 million shares, or 7.2 per cent of its enlarged share capital, at HK$190 (US$24.38) to HK$220 apiece. There is an overallotment option to sell up to 2.4 million more shares if there is strong enough demand.

In August Cloud Village got the go-ahead from the Hong Kong stock exchange’s listing committee that would have enabled it to kick off a share sale. But it decided to postpone as Chinese tech companies grappled with heightened regulatory scrutiny.

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How China censors the internet

Beijing’s crackdown, targeting tech giant’s anti-competitive behaviour and data privacy abuse, dried up IPO deals in Hong Kong. Fundraising in the third quarter of this year stood at the lowest since the first quarter of 2020 when Covid-19 killed the market.

At the time, Chinese tech companies faced uncertainty related to draft regulations that required platform operators in possession of at least a million users’ personal data to clear cybersecurity review before applying for an IPO.

But on November 14, a separate set of draft regulation clarified that the requirement does not apply to Hong Kong IPO candidates, thus clearing the path for some new issuers to push forward with their deals.

Bank of America, CICC and Credit Suisse are the joint sponsors and joint bookrunners for the deal. Cloud Village’s shares are scheduled to debut on December 2, and will trade on the main board under the stock code “9899”. The IPO will end on Friday.

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