Tencent Music Entertainment, the largest provider of music streaming apps in China, filed for an IPO with the US Securities and Exchange Commission as it aims to generate funds to develop new services.
The company, a subsidiary of Chinese internet giant Tencent, plans to list on the Nasdaq. While it is yet to disclose the number of shares to be offered or the estimated valuation of the listing, several media outlets reported it is looking to raise between $1 billion and $2 billion.
Its online music services include QQ Music, Kugou and Kuwo; and online karaoke app WeSing. The company said it had more than 800 million monthly active users in the first quarter of 2018.
In its SEC filing, Tencent Music Entertainment said its paying user base grew from 15.3 million in Q1 2017 to 22.3 million in Q1 2018, or 3.6 per cent of total customers, which it stated “is still very low compared to online games and video services in China, and other online music services globally, indicating significant growth potential”.
It cited data from iResearch predicting China’s online music pan-entertainment market will grow 36.7 per cent annually from CNY33 billion ($4.8 billion) in 2017 to CNY215.2 billion in 2023.
The company’s revenue jumped 152 per cent year-on-year in 2017 to CNY10.98 billion, with a profit of CNY1.3 billion. Music-centric social entertainment services, which covers virtual gifts and premium memberships, accounted for 71 per cent of the revenue figure. Customers paying for the service increased to 9.6 million at end-March from 6.2 million in Q1 2017.
The US listing is expected to be one of the largest by a China-based company in the country this year, Reuters said. Chinese companies listed in the US this year include video streaming company iQiyi (raising $2.4 billion) and electric vehicle start-up Nio ($1 billion).
Earlier this week, Tencent announced a sweeping reorganisation of its consumer business and detailed plans to attract enterprise customers, as it moves to deal with increased pressure on its core gaming and social media services.Subscribe to our daily newsletter Back