Tencent Music hits a pause on its IPO play amid global market selloff

Chinese tech giant Tencent Holding's subsidiary postpones its US$2 billion IPO listing over concerns on the selloff in global markets.

stocks-down-quotes-300x200

Tencent Holdings’ subsidiary Tencent Music is said to have postponed its initial public offering (IPO) until at least November, due to the ongoing selloff in global markets.

Tencent Music had last week met with its underwriting team to set a listing price for the IPO, but it subsequently decided to hit the pause button on the IPO over worries that the market condition could affect the pricing, according to reports from The Wall Street Journal and Reuters late Friday evening, which cited sources familiar to the IPO listing.

Last week, United States’ (US) Wall Street suffered its worst single-day drop in eight months on Wednesday as it shrank 3.29%, and then slumped further falling by 2.06% on Thursday. The International Monetary Fund had earlier in the week downgraded its global economic growth predictions for this year and next year, pointing out that the trade war between the two largest economies - the US and China - is taking a toll on global growth.

The turmoil in the markets continued on for this week. Asian markets resumed its slide on Monday morning, with Japan’s Nikkei 225 shedding almost 2%, Singapore’s Straits Times Index down 0.27%, China’s Shanghai Composite Index lower by 0.04%, and Hong Kong’s Hang Seng Index also declining by 1.16% in the opening minutes.

Tencent Music plans to raise US$2 billion IPO

Earlier in September, the group was said to be seeking to raise US$2 billion in its US IPO. The subsidiary of Chinese tech giant Tencent had filed under confidentiality with the US Securities and Exchange Commission.

Tencent Music which is said to be expecting a valuation of between US$25 billion and US$30 billion through the share sale, was valued at US$12.5 billion late last year, after its deal with Spotify to swap shares.

The group which has a business model that blends music streaming, video content, and social media controls around three-quarters of China’s music streaming market, running music from Chinese and international artists on service providers such as KuGou, Kuwo and QQ Music. It claims to have more than 800 million monthly active users.

The trade dispute between the US and China has affected stock markets and company stock valuations, amongst other things. Tencent Music’s parent Tencent, has at its worst seen its stock wiped out by more than US$250 billion in market value from its January high. Tencent owns 58 percent of the music division.

Tencent Music's eventual listing would see it follow a string of Chinese tech companies that have listed on US markets, including online group discount service Pinduoduo.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer