Arthur J. Villasanta – Fourth Estate Contributor
New York, NY, United States (4E) – Tencent Music Entertainment Group, which accounts for more than half of all music streaming revenues in China, raised $1.1 billion in its IPO at the New York Stock Exchange yesterday.
Analysts said Tencent Music’s impressive debut on Wall Street continues to prove the enduring popularity of music streaming apps and the companies that market them. Tencent Music’s IPO was one of the largest by a Chinese company in the United States this year.
Its shares opened at $14.10, or 8.5 percent above its IPO price of $13 per share. This opening gave Tencent a market capitalization of $23 billion, and towards the end of the trading day had risen as much as 13.5 percent from its IPO price.
Tencent Music, which is owned by Tencent Holdings Ltd, priced its IPO at the lower end of its $13 to $15 pricing range on Tuesday.
“We are very proud to be able to complete the IPO despite the challenging market,” said Chief Strategy Officer Tony Yip. “Raising over $1 billion in this type environment is not an easy task.”
Tencent’s IPO debut marks an end to a turbulent listing process that saw Tencent postpone its IPO until November in a market wracked by Trump’s trade war with China. Its IPO came after the U.S. and China agreed to a 90-day truce in their trade war last week.
“If this (Tencent Music’s) IPO came out at a different time, without the geopolitical risk that is currently in the market, we would have seen a much different result in terms of Tencent Music’s pricing,” said Jeff Zell, senior research analyst and partner at IPO Boutique, an IPO tracking firm.
Tencent Music claims more than 800 million monthly active users and has a music content library with over 20 million tracks as of Sept. 30. It offers online music, online karaoke and music-centric live streaming services.
Online music services contributed 30 percent to the company’s total revenue in the first nine months of the year. On the other hand, music-centric social entertainment services (such as virtual gifts and premium memberships) accounted for more than 70 percent of its $1.65 billion revenues in 2017.
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