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Tencent raises $1.1 Bn for NASDAQ IPO

Tencent raises $1.1 Bn for NASDAQ IPO
Image Credits: FT.com

Chinese Gaming and Social Media giant Tencent said that its Music wing, Tencent Music Entertainment raised as much as $1.1 billion dollars for the Initial Public Offering at NASDAQ. The company’s shares were evaluated at $13 per share, which was the very bottom rung for the company’s expected target for their IPO for $13 to $15. The company is rumoured to have paused the listing process, and this could be an effect of the same.

Tencent Music Entertainment has been valued at a whopping $21.3 billion. Tencent Music is said to have sold 41 million ADRs while other stakeholders have sold another 40.9 million as per the IPO filing. This is the second highest amount since 2014 when the Alibaba group raised nearly $25 billion for their IPO. This offering is also just under the $30 billion which their rival, Spotify raised when filing their IPO. Spotify rests at nearly $24 billion currently.

As Chinese enterprises keep filing for IPOs in the NASDAQ Stock Exchange, the Chinese firms have raised a healthy $6.25 billion in the US market this year with TME raising $1.1 billion, while video streaming platform iQiyi raised $2.4 billion, Electric Carmaker NIO raised $1.15 billion, and the online group discounts platform raised around $1.6 billion. However, the returns don’t seem to be that promising.

According to a report, 31 Chinese IPOs have been at a constant decline of 11% at an average across all organisations since the beginning of 2018.

Tencent Music Entertainment in specific had paused their IPO listings in mid-October fearing damaged due to US-China Trade Wars earlier this year. This has apparently impacted their IPO by lowering their market rates since they have barely made their IPO target.

The company, however, has faith in its recovery since it claims to have 800 million subscribers across China.

As far as profitability goes, the sun shines upon Tencent Music as it continues to generate increasing amounts of revenue, gaining nearly CNY 8.6 billion or $1.3 billion in the first six months of the year. However, that number is made insignificant by Spotify’s impressive revenue, which generated EUR 1.4 billion or $1.59 billion dollars in the last quarter alone. Luckily, the trends put TME on the path of a 244% profit for the last three quarters.

With the help of their endless music streaming apps such as QQMusic, Kuwo, KuGou and even their karaoke application We Sing, Tencent Music Entertainment might as well be able to make an impact in the US Stock Market in quite the same way in which it has achieved in the country of China. With the rising rates of profit, TME might just turn the tables. around on their competition Spotify soon, which suffered a net loss of $520 million.