Tencent Music sets RM4.6b IPO at bottom as markets gyrate

By BLOOMBERG

HONG KONG • Tencent Music Entertainment Group and existing investors raised about US$1.1 billion (RM4.61 billion) after pricing a US initial public offering (IPO) at the bottom of a marketed range, succumbing to the same global market turbulence that’s sapped enthusiasm for stock debuts.

China’s largest music-streaming service, which is backed by Tencent Holdings Ltd, and current holders sold 82 million American depositary shares at US$13 apiece, according to a statement. The shares were offered at US$13 to US$15 each.

Tencent Music opted to price lower after initially guiding fund managers that orders were coming in around the midpoint of the marketed range.

Tencent Music will debut at a valuation of about US$21.3 billion, falling short of the US$23.3 billion of Spotify Technology SA, the Swedish peer that’s also an investor in the Chinese company. Its less than optimal IPO pricing doesn’t bode well for mainland companies considering their own coming-out parties, and follows recent lacklustre debuts by the likes of Mogu Inc.

“The pricing is primarily due to weak general market sentiment,” said Vey-Sern Ling, an analyst with Bloomberg Intelligence. “The secondary reason is market scepticism about music streaming platforms, due to the poor experience with Spotify, which is below its IPO price.”

The deal adds to the US$8 billion raised in US first-time share sales by Chinese companies this year, more than double the same period in 2017, data compiled by Bloomberg show. It’s the biggest year for mainland firms since 2014, when Alibaba Group Holding Ltd priced the world’s largest IPO, the data show.

In the coming year, major tech corporations from Uber Technologies Inc to China’s ByteDance Ltd are said to be considering IPOs — both to raise capital and offer longstanding backers an exit.

Tencent Music, the online-music arm of China’s largest social-media company, had been one of the year’s most anticipated first-time share sales. The Chinese company, however, has a more diverse business.

It focuses on online music through products such as QQ Music; online karaoke sites like WeSing; and livestreamed performances.