China-based music streaming company Tencent Music Entertainment Group said it raised close to US$1.1 billion (RM4.6 billion) in its U.S. initial public offering (IPO) after pricing its shares at the bottom of its targeted range.
Tencent Music will begin trading on the New York Stock Exchange today under the symbol "TME".
The opening share price translates to a market capitalization of $23 billion for Tencent Music, which is on a par with the $23.35 billion market value of Spotify, the world's largest music streamer. "The secondary reason is market skepticism about music streaming platforms, due to the poor experience with Spotify, which is below its IPO price".
Tencent Music's IPO tops off a bumper year for USA listings by Chinese companies, with US$7.9 billion raised before Tencent Music's debut, Refinitiv data showed.
"Strong companies often choose to go public despite hard market conditions and historically that has been a rewarding opportunity for investors", said David Ethridge, U.S. IPO services leader at PricewaterhouseCoopers.
It was created in 2016 after Tencent Holdings bought a controlling stake in China Music Corp. and combined it with Tencent's existing streaming business. In fact, its profit and revenue numbers dwarf that of Spotify and Apple Music by significant margins. Although still a significant stock exchange debut, the money raised and accompanying valuation is considerably lower than what had been predicted earlier this year.
Tencent Music initially planned to launch the deal in October, but postponed because of a sell-off in global markets roiled by a U.S.
In the second quarter of 2018 Tencent Music reported a total of more than 800 million monthly active users, who each spend on average more than 70 minutes per day on its platform.
Tencent, whose shareholders include the leading music streaming service Spotify, earned $199 million on revenue of $1.66 billion a year ago.
Tencent Music owns the four largest music apps in China - streaming apps QQ Music, Kugou Music and Kuwo Music, and karaoke app WeSing. Our platform is an all-in-one music entertainment destination that allows users to seamlessly engage with music in many ways, including discovering, listening, singing, watching, performing and socializing. By comparison, Spotify lost a net $520m.
Tencent has achieved profitability partly by having other revenue streams than just ads and subscription sales.