Tencent acquires stake in newly public Warner Music Group
- At current prices, Tencent’s investment is worth more than US$246 million
- The music industry is enjoying a long-running financial renaissance, thanks to the popularity of streaming services
Tencent Holdings acquired a 10.4 per cent stake in the class A shares of Warner Music Group Corp, a bet on the industry’s long-term growth prospects following the US music label’s US$1.9 billion initial public offering last week.
Shenzhen-based Tencent, which runs the world’s largest video games business by revenue and China’s largest social media platform, bought 8 million class A Warner Music shares, according to a regulatory filing on Friday.
At current prices, Tencent’s investment is worth more than US$246 million. That represents a quick gain from the initial price of US$25 a share that Warner Music fetched last week in its IPO.
In December, a consortium led by Tencent agreed to buy a 10 per cent stake in Universal Music Group, the world’s biggest music company.
Warner Music is controlled by billionaire Len Blavatnik through his ownership of Class B stock with super voting rights. Including all of the classes of stock, the company holds a 1.6 per cent stake.
The music group is the only separately traded major US label. The largest, Universal Music, is owned by Vivendi, followed by Sony Corp’s Sony Music Entertainment.
The industry is enjoying a long-running financial renaissance, thanks to the popularity of streaming services like Spotify Technology and Apple Music from iPhone maker Apple. Warner Music’s sales grew 12 per cent last year.
New York-listed Tencent Music Entertainment Group, a joint venture between Tencent and Spotify, runs popular Chinese apps QQ Music, Kugou Music, Kuwo Music and WeSing.
Shares of Warner Music rose 2.6 per cent to US$30.77 in New York. The stock has gained 23 per cent from the offering price.