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Tencent Music $30 Billion IPO Heads to U.S.

Tencent Music Entertainment, the music distribution arm of Chinese social media and games giant Tencent, aims to list its shares on a North American stock market.

Tencent announced a brief outline of its long-rumored plans in a regulatory filing to the Hong Kong Stock Exchange, where its shares are listed. Tencent said that the spin-off of its majority-owned subsidiary needed and had received approval from the Hong Kong authorities.

“The terms of the proposed spin-off, including offering size, price range and assured entitlement of Tencent Music securities for shareholders of the company, have not yet been finalized,” Tencent said. Nor has the timing of the planned offering been decided.

Chinese media sources point to a share sale that will value Tencent Music in the $29 billion to $31 billion range. That is higher than the $25 billion estimates touted earlier this year.

Although Tencent and its recent spin-off Tencent Literature are both listed in Hong Kong, the choice of a U.S. exchange for Tencent Music is understandable. It would allow financial analysts and investors to directly compare it with the world-leading music group Spotify Technology, which is also listed in the U.S. (on the New York Stock Exchange) and is currently valued at $29.9 billion. Following a share swap late last year, Spotify owns 9% of Tencent Music, and Tencent owns 7.5% of Spotify.

Tencent Music counts over 700 million monthly users, of which about 15 million may be paying subscribers. It operates a variety of apps allowing users to stream music, watch live performances and play karaoke, as well as a close connection to Tencent’s WeChat messaging platform, which has more than 1 billion users.

In its current form, Tencent Music was established in 2016 after a merger with streaming rival China Music. Since then it has cemented its leadership position by adding to and renewing deals with international studio groups Universal Music, Warner Music and Sony Music. It also has deals with China’s Huayi Brothers Music and Korea’s YG Entertainment.

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