China’s Tencent Music has filed a much-anticipated request to list its shares in the US. According to an F-1 filing uploaded to the Securities and Exchange Commission the music arm of Chinese tech giant Tencent plans to raise as much as $1 billion, in what could be one of the largest U.S. IPO’s by a Chinese company since Alibaba raised over $20 billion in 2014.
“We had a paying ratio of 3.6 percent in the second quarter of 2018, which is still very low compared to the paying ratios of online games and video services in China and other online music services globally as quoted by iResearch, which indicates significant growth potential,” the company wrote.
Tencent says its services have more than 800 million users, including 23.3 million subscribers who pay to listen to its music library. It is also profitable, having earned $199 million on revenue of $1.66 billion last year.
According to a note in the F-1 prospectus, both Warner Music Group and Sony Music Entertainment have acquired shares in TME, for an aggregate cash consideration of approximately $200m.
Tencent Music owns the four largest music apps in China — streaming apps QQ Music, Kugou Music and Kuwo Music, and karaoke app WeSing. The company recently boasted more than 800 million total unique monthly active users. It was created in mid-2016 after Tencent Holdings bought a controlling stake in China Music Corp. and combined it with Tencent’s existing streaming business.
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