Tencent Music said to delay US listing because of stock market turmoil

The possible listing delay comes after a global stocks plunge amid rising US and China trade tensions

PUBLISHED : Friday, 12 October, 2018, 1:49pm
UPDATED : Friday, 12 October, 2018, 3:42pm

Tencent Music Entertainment Group, China’s biggest music-streaming company, is set to postpone an initial public offering in the US amid current market turmoil, according to a report by The Wall Street Journal. 

The online-music arm of China’s largest social-media company, which filed for an IPO on October 2, met with its underwriting team this week and they opted to delay until at least November amid concerns the market rout would affect pricing, a person familiar with the situation told The Journal.

Tencent Music was expected to kick off a roadshow to sell shares next week and start trading the following week.

Tencent Music declined to comment on the IPO delay report.

The possible listing delay comes after a global stocks plunge amid rising US and China trade tensions, which has rattled the tech sector in particular on a view that slowing economic growth will hit consumption and earnings. The Dow Jones Industrial Average and the S&P 500 suffered two-day losses in excess of 5 per cent as of Thursday’s close and on Wednesday the tech-focused Nasdaq logged a 4.1 per cent loss, its biggest decline of 2018.

Tencent Music IPO filing offers glimpse into world of Chinese online karaoke

Meanwhile parent Tencent Holdings, which owns 58 per cent of the music-streaming company, fell 6.8 per cent on Thursday in Hong Kong and has now lost more than US$250 billion in market value since late January.

Last Tuesday, Tencent Music listed its offering size as US$1 billion in a filing with the US Securities and Exchange Commission, setting the stage for China’s largest music streamer to become one of the biggest technology IPOs this year. No information on a specific listing date was disclosed in the filing.

The music arm of Tencent owns the four largest music apps in China including Kugou Music, Kuwo Music as well as an online karaoke platform We Sing and streaming app QQ Music. Tencent Music is often described as China’s answer to Sweden’s Spotify, the world’s biggest music streaming service, although it actually derives a significant stream of revenue from tips given to online karaoke performers.

Online karaoke, like social commerce and live-streaming, is being embraced in China as companies and internet users experiment with new formats to deliver entertainment and sell products and services.

Tencent Music reported a total of more than 800 million monthly active users in the second quarter of 2018, who each spend on average more than 70 minutes per day on the platform. In contrast to Spotify, which is still unprofitable, Tencent Music posted 1.7 billion yuan in profit as of end of June, up from 1.3 billion yuan in the same period a year ago.

Additional reporting by Iris Deng