Music Business

Tencent Music Sets 2018 U.S. IPO, Spotify Could Net $2B

Tencent musicAfter speculation that Tencent Music would delay its IPO until 2019, the streamer filed paperwork Monday to move forward with a U.S. stock offering before the end of 2018. The IPO could also be a big win for Spotify.

The music division of Chinese tech and shopping giant Tencent Holdings hopes to raise between $1.07 billion and $1.23 billion from a New York Stock Exchange IPO, according to today's SEC filings.  That's well below the $2 billion the company had originally hoped to net.

IPO shares are expected to price between $13 and $15 per trading on the NYSE under the ticker symbol "TME." 

Tencent Music will IPO with valuation of between $22 billion and $25 billion. Spotify went public earlier this year with a market valuation of $24 billion.

The IPO comes at a rocky time in the public stock markets. But sources say that the company decided to launch the IPO now over concerns that tense U.S. and China relations may only get worse next year.

Spotify Could Gain $2B, Increased Investor Confidence

Late last year, Tencent and Spotify did a stock swap, taking an estimated 9% non-controlling interest in the other. In a filing at the time, Spotify told investors, “Spotify believes the Tencent Transactions allow Spotify to invest in the long term potential of the music market in China and, in turn, TME to invest in the long term potential of the music market outside of China.”

In addition to opening up potential new opportunities for both companies, the stock deal aligned two of the worlds top streaming services music streaming services in future licensing negotiations with labels and music publishers.

If Tencent Music were to successfully IPO at a $22-$25 billion valuation, Spotify's share of TME could be worth more than $2 billion. A successful TME IPO could also further bolster investor confidence in Spotify and its yet-turn-a-profit business model.



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