Tencent Music, China’s largest streaming firm, has raised $1.1 billion in a U.S. IPO after it priced its shares at $13 a chunk forward of an inventory on the Nasdaq.
That makes it one of many largest tech listings of the 12 months, however the pricing is on the backside finish of its $13-$15 vary indicating that the much-anticipated IPO has felt the results of an unsure market. Certainly, the corporate is claimed to have paused the itemizing course of, which it began in early October, for a time so uneven are the waters proper now — and that’s not even mentioning a shareholder-led lawsuit that was filed final week.
Nonetheless, this itemizing offers TME — Tencent Music Leisure, a spin-out of Tencent — a formidable $21.three billion valuation which is slightly below the $30 billion that Spotify commanded when it went public earlier this 12 months by way of an unconventional direct itemizing. TME was valued at $12 billion on the time of Spotify’s itemizing in Q1 of this 12 months so that is additionally a giant leap. (In the meantime, Spotify’s current market cap is round $24 billion.)
The corporate operates a constellation of music streaming companies in China which span orthodox Spotify-style streaming in addition to karaoke and live-streaming companies. Altogether, TME claims 800 million registered customers — though there’s doubtless slightly inventive accounting or double counting throughout apps concerned because the Chinese language authorities itself says there are 800 million web customers in your complete nation.
Notably, although, TME is worthwhile. The identical can’t be stated for Spotify and certain Apple Music — though we don’t have financials for the latter. That’s right down to the distinctive enterprise mannequin that the Chinese language agency operates, with subscription and digital items a significant driver for its companies, whereas Tencent’s ubiquitous WeChat messaging app helps it attain customers and acquire virality.
Tidy although the numbers are, its revenues are dwarfed by these of Spotify, which grossed €1.four billion ($1.59 billion) in gross sales in its final quarter. For comparability, TME did RMB 8.6 billion ($1.three billion) in income for the primary six months of this 12 months.
TME executives are taking that as an indication that there’s ample scope to develop their enterprise, though it appears unlikely that may ever be as international as Spotify. The 2 corporations may but collaborate sooner or later although, since they’re each mutual shareholders by way of a share swap deal that concluded one 12 months in the past.
You possibly can learn extra about TME in our deep dive under.
We additionally wrote in regards to the classes Western companies like Spotify and Apple Music can study from TME.