China's Tencent Music raises nearly $1.5b in US IPO

NEW YORK - China-based music streaming company Tencent Music Entertainment Group's has raised close to US$1.1 billion (S$1.5 billion) in its US initial public offering (IPO) after pricing its American depositary shares (ADRs) at the low end of its indicated US$13 to US$15 per share range, a source said on Tuesday.

The IPO shows how companies are defying a bout of stock market volatility with flotations. It tops off a bumper year for US listings by Chinese companies, with US$7.9 billion raised prior to Tencent Music's debut, Refinitiv data showed. That is the highest amount since 2014, the year of Alibaba Group Holding's record US$25 billion IPO.

Tencent Music's US IPO is the fourth largest among Chinese firms this year. Video streaming company iQiyi Inc leads with its US$2.4 billion listing, followed by online group discounter Pinduoduo Inc at US$1.6 billion and electric vehicle maker NIO Inc at US$1.15 billion.

With streaming apps QQ Music, KuGou, Kuwo as well as karaoke app We Sing, Tencent Music is China's largest online music platform boasting more than 800 million monthly active users. The firm is often compared with Spotify Technology SA, but offers more socially interactive services that make it profitable while its Swedish counterpart is not.

Tencent Music sold 41 million ADRs while existing shareholders sold a further 40.9 million, the source said, asking not to be identified ahead of an official announcement. The IPO gives the company a valuation of US$21.3 billion.

Tencent Music declined to comment.

Tencent Music initially planned to launch the deal in October, but postponed because of a sell-off in global markets roiled by a US-China trade war and fears of slowing global growth.

The final deal size is also smaller than the US$3 billion to US$4 billion that IFR, a Refinitiv capital markets publication, reported the firm had initially planned to raise in May. Tencent Music never confirmed fundraising figures.

One person close to the deal told Reuters the smaller figure was due to the company's valuation falling as a result of market volatility.

Tencent Music reported a 244 per cent profit jump for January-September to US$394 million. By comparison, Spotify lost a net US$520 million.

Bank of America, Deutsche Bank, Goldman Sachs, JPMorgan and Morgan Stanley are the lead sponsors of Tencent Music's deal.