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Chinese company Tencent Music files for US IPO as Sony and Warner Music snap up $200M in shares

Spotify, which went public on US exchanges earlier this year, owns 9% of the shares

The Tencent Music app displayed on a phone
Investors are likely to sit up and take notice as China’s largest music-streaming company has posted an annual profit for the last two years

China’s largest music-streaming company, Tencent Music Entertainment Group, has filed for an initial public offering in the United States.

In a filing Tuesday, the music arm of Chinese tech giant Tencent set a placeholder amount of $1 billion to indicate the size of the IPO and applied to list on the New York Stock Exchange and tech-laden Nasdaq under the symbol “TME”.

The company recently cut its plan to raise $4 billion by half, and is now seeking $2 billion. This large IPO comes close on the back of Shanghai-based electric-vehicle maker NIO Limited's (NYSE:NIO) IPO which raised $1 billion by selling 160mln American depositary shares last month.

Still, the numbers are dwarfed by Chinese giant Alibaba Group Holding Ltd (NYSE:BABA) which raised more than $20 billion in 2014.

Both Warner Music Group and Sony Music Entertainment have acquired shares in Tencent Music for approximately $200 million in cash, reported Variety.

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Investors are likely to sit up and take notice that the Chinese music streaming company has posted an annual profit for the last two years.

The filing shows that in the first half of 2018, Tencent Music reported a profit of $263 million on revenue of $1.3 billion. For the entire 2017 year, it posted $199 million in profit on revenue of $1.7 billion.

Parent company Tencent owns 58% of the music division, while Spotify, which went public on US exchanges earlier this year, owns 9% of shares.

Investor appetite for IPOs has powered a surge in new listings. More than 180 companies raised over $50 billion in IPOs in the US in the first three quarters, putting 2018 on track to be the busiest year for new issuance by both measures since 2014, according to Dealogic.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

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