Tencent plans to exercise its option to lift its stake in Vivendi’s Universal Music, in a move to diversify from gaming and China

Tencent, which led a consortium that bought 10 per cent of the world’s largest music company, has the option to raise their stake to as much as 20 per cent until January 15, 2021

It isn’t clear if Tencent’s decision to proceed would be joined by its partners Hillhouse Capital and GIC of Singapore

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A woman uses her smartphone near a booth for the Chinese internet company Tencent at the Global Mobile internet Conference in Beijing on December 19, 2019. Photo: AP Photo

Published: 11:07am, 14 Oct 2020Updated: 11:07am, 14 Oct 2020

Tencent Holdings is planning to increase its stake in Universal Music Group by a further 10 per cent before the option expires in January, according to people familiar with the matter.

The Chinese technology company last year led a consortium that bought 10 per cent of the world’s biggest music company from French media company Vivendi. That deal valued Universal Music at €30 billion (US$35.2 billion) and Tencent and its partners have the option to increase their stake to as much as 20 per cent at the same valuation until January 15, 2021.

Tencent is likely to exercise this option, three people said, asking not to be identified as the deliberations are private. It could make the move before year-end, one person said.

It isn’t clear whether Tencent will be joined by the original consortium members, the identities of which haven’t been made public, the people said. Hillhouse Capital and Singapore sovereign wealth fund GIC were among potential investors that Tencent approached, Bloomberg News reported last year.

Deliberations are ongoing, and Tencent could still opt not to increase its stake in Universal Music, one of the people said. Representatives for Tencent and Vivendi declined to comment.

By increasing its stake, Tencent would seek to diversify from gaming and China, where it has been busy with deals this year. It’s helped orchestrate the combination of Huya and DouYu International Holdings, creating a Chinese game-streaming giant with a market value of more than US$11 billion. It has also proposed to take private Chinese gaming firm Leyou Technologies Holdings.

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