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Tencent Holdings Ltd has submitted a proposal to the Stock Exchange of Hong Kong seeking a separate listing of Tencent Music, its online music entertainment business, on a US stock exchange. The HKEX has confirmed that Tencent can proceed with the proposed spin-off. The terms of the spin-off have not been finalized yet.
The listing could value Tencent Music at over $30 billion, slightly lower than the Swedish online music juggernaut Spotify’s market value of $31 billion. Tencent Music could become the fourth largest (in Chinese) technology company by market value to list in the US.
According to Bloomberg’s earlier report, Tencent Music has selected banks to advise on the US IPO and that it is reportedly seeking to raise at least $1 billion.
Spotify, who owns 9% of Tencent Music after a joint equity investment last December, would cash in from Tencent Music’s IPO. Major music labels—Universal Music Group, Sony Music Entertainment and Warner Music Group—would profit from Tencent Music’s IPO as they also own a portion of the company.
Tencent is the largest social media and gaming company in China. Tencent Music, along with Ali Music Group (owned by Alibaba) and NetEase Music, currently dominate China’s music streaming industry. After IPO, Tencent Music’s market value will likely come close to or even surpass that of the Chinese internet giant NetEase, who is currently valued at $34.3 billion. According to the latest figures, Tencent Music currently has 700 million monthly active users (MAU), 17 million songs, and 120 million subscribers.