The Sino-American trade war will not stop one of China’s blue-chip tech companies from floating one of its prized assets. Following the debut of Xiaomi Corp’s shares in Hong Kong on Monday, Tencent says it is pressing ahead with the spin-off plan to list Tencent Music in the United States.
While some observers expect a US$30 billion offering, Tencent claims that its scale and price have yet to be determined.
The company, dubbed China’s answer to Spotify, hopes to repeat the success of its more famous competitor, which debuted in April and now has market capitalization of close to US$30 billion.
Spotify and Tencent Music swapped 10% of shares with each other last year. Tencent owns 62.42% in Tencent Music, 20.75% of which is owned by founders by Kugou and Kuwo. The remaining stake is shared among record companies such as EMI and Sony.
With a 77% share of the Chinese market, Tencent Music currently has an active user base of 700 million, including 120 million paying customers.
Despite rampant piracy and the wide availability of free music over the Internet, Tencent Music last year made 1.6 billion yuan (US$241.6 million), up 166% on a turnover of 9 billion yuan, according to mainland media. This year, the music streaming company is expected to double its profit and turnover.
Tencent Music is the second wave of Tencent, a fully developed content platform that includes its banner WeChat messaging app, games and other popular applications.
Last year Tencent spun off its popular e-book venture China Literature and its car-listing service Yixin. China Literature share prices doubled on the first trading day and remain up 33% from the offer price. Yixin, on the other hand, is down close to 60%.
Tencent is currently looking to cash out its investment in Meituan-Dianping, a group-buying website in the process of listing in Hong Kong.