Tencent, the Chinese social media and gaming juggernaut, has proposed to spin-off its online music streaming business Tencent Music for a separate listing at the New York Stock Exchange (NYSE).
According to reports, emerging in various Chinese newspapers, Tencent Music Entertainment is preparing to go public in the United States on 18th October 2018. The Tencent IPO could be valued between 29 billion to 31 billion U.S Dollars.
Tencent Music reportedly generated about $714 million in revenues in 2016. Internal filings cited by Chinese media outlets forecast 40% sales growth in both 2017 and 2018, which means the company could generate $1.4 billion in sales this year.If those numbers are accurate, a $30 billion valuation could be too high since it would value the company at 21 times this year’s sales. Tencent’s valuation has jumped up to 30 Billion US Dollars after being valued at 11.5 Billion U.S Dollars as recently as December.
Inspite of having fewer paid members than Spotify and also owning streaming rights to less than 50% of the songs, Spotify has a 9% stake holding in Tencent. This stake could be worth $2.7 billion if Tencent makes its market debut at $30 billion. Currently Spotify is trading at 194 U.S Dollars in the New York Stock Exchange, after getting listed in April this year.
The Stock Exchange of Hong Kong Limited (SEHK) listed Tencent having a market value of around $480 billion, owns an array of internet businesses, including WeChat, a multipurpose messaging app that has more than a billion users. Tencent Music Entertainment operates three digital music services : QQ Music, plus Kugou and Kuwo. The three services had a combined 700 million monthly users in China as of September 2017, according to Tencent.
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