Tencent Music May Push IPO to 2019

So, when exactly will Tencent Music launch its fabled IPO?

Earlier this year, Spotify changed Wall Street forever with its $26 billion direct offering.  Well-positioned investors, including Sony Music, Universal, Warner Music Group, and Merlin, all received huge payouts from their shares.  Tencent Holdings took notice.

Months later, the Chinese conglomerate revealed its plan.  To capitalize on the strength of its music service portfolio, Tencent Music Entertainment (TME) would also go public on Wall Street.  TME owns three streaming music services – QQ Music, Kuguo, and Kuwo.  The company also owns We Sing, a popular karaoke app.

Collectively, Tencent Music has over 700 million monthly active users with around 14 to 21 million subscribers.  iQiyi, a separate Chinese streaming video platform, launched in the US with a successful $2.42 billion valuation last March.  Underwritten by Goldman Sachs and Morgan Stanley, Tencent Music was valued between $29 billion and $31 billion.

After filing with the Securities and Exchange Commission (SEC) over the summer, the date for Tencent Music’s IPO was set.  The company would go public on October 18th.

Due to turbulent market conditions around the world, however, the Chinese streaming music giant delayed its IPO.  The global sell-off also hurt its parent company.  This year alone, Tencent Holdings has lost over $250 billion in market value.

Now, with stocks facing another turbulent season, the Chinese streaming music giant appears to be delaying its IPO once more.

Under pressure.

According to two sources speaking with Reuters, Tencent Music and its financial advisors have discussed waiting until 2019.

Stating the company hasn’t reached a decision about when to go public, one source explained,

Of course they want to get the deal done within the year, but meanwhile, they don’t want to rush for the listing.  What they care about a lot is (getting) the right valuation, rather than the fast pace of the listing.

Another source said TME continues to emphasize its valuation.  The company expects to raise up to $2 billion in the IPO launch.  Yet, executives are waiting until the right time to launch.

We continue to monitor [market conditions].”

The company has refused to comment on the report.  The sources remained anonymous because “deliberations are not public.”

TME faces huge pressure to launch this month.  Typically, writes Reuters, investors don’t view December as “an ideal month for large New York IPOs.”  The New York Stock Exchange slows down during the busy holiday season.  Should TME launch at the end of this month or the next, it may not raise the $2 billion it expects.

 


Featured image by Sam Valadi (CC by 2.0).