Chinese music-streaming company Tencent Music Entertainment Group nearly raised $1.1 billion in its US initial public offering (IPO) after setting its shares price at the bottom end of expectations.
The music unit of internet services giant Tencent Holdings Ltd. priced its American Depositary Receipts (ADRs) at $13 per share, below of its targeted $13 to $15 apiece range, according to a Hong Kong stock exchange filing.
Tencent Music sold 41 million ADRs, while existing shareholders sold an additional 40.9 million.
The listing gives Tencent Music a $21.3 billion valuation, making it one of the largest US listing based on market value at IPO since in e-commerce firm Alibaba Group Holding Ltd. in 2014.
The IPO also shows how companies are dealing with a bout of market volatility with flotations.
Tencent Music’s offering was able to end what seemed to be bumper year for US listings by Chinese companies on a positive note, with $7.9 billion raised before its debut.
That is the highest amount since 2014, when Alibaba’s record $25 billion IPO.
However, the performance of this year’s IPOs did not made much of an impression.
Data from an analytics firm showed returns for investors have been mixed, with the 31 Chinese IPOs this year dropping an average of about 11 percent as of December 10, compared with a gain of 6.5 percent for all US-listed IPOs.
By deal value, Tencent Music’s IPO is the fourth biggest among Chinese groups this year. Video-streaming firm iQiyi Inc. leads with its listing worth $2.4 billion, followed by online group discounter Pinduoduo Inc. at $1.6 billion, and electric carmaker NIO Inc. with $1.15 billion.
China’s biggest online music platform initially intended to launch the deal in October but it was put on hold due to a sell-off in global stock markets stirred up by a US-China trade war and concerns over a slowdown in global expansion.
The S&P 500 index of blue chips has slipped 1.4 percent since the beginning of 2018 and more than 10 percent below its September high.
Shares of Tencent Music’s are set to start trading on Wednesday on the New York Stock Exchange.
Lead sponsors of the deal include Morgan Stanley, Bank of America Corp. (BofA), Deutsche Bank AG, Goldman Sachs Group Inc., and JPMorgan Chase & Co.
For the nine months ended September 30, Tencent Music’s total earnings rose 244 percent to $394 million. By comparison, Sweden’s Spotify Ltd. lost a net $520 million.
Being China’s biggest online music platform, Tencent Music operates a number of streaming apps in the country including QQ Music, KuGou, Kuwo, and karaoke app We Sing. Altogether, the company has more than 800 million active users monthly.
Tencent Music’s streaming services is often compared with Spotify Technology SA, but the Chinese company offers more socially interactive services that make it profitable while Spotify is not.
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