Tencent Music to IPO with profits, Spotify backing

A pedestrian walks past Tencent Holdings Ltd.'s completely new under construction headquarters in Shenzhen, China;

Qilai Shen | Bloomberg | Getty Images

A pedestrian walks past Tencent Holdings Ltd.’s completely new under construction headquarters in Shenzhen, China;

Tencent’s music division can be set to go public with actual profits on the board as well as industry competitor Spotify as a backer, according to a newly filed prospectus.

The music arm of Chinese tech giant Tencent plans to raise as much as $1 billion, in what could be one of the largest U.S. IPOs by a Chinese company since Alibaba raised over $20 billion in 2014.

Tencent Music owns the four largest music apps in China — streaming apps QQ Music, Kugou Music as well as Kuwo Music, as well as karaoke app WeSing. The company counted more than 800 million unique monthly active users during the second quarter of 2018, according to the filing.

For the first six months of 2018, Tencent Music reported a profit of $263 million (or $320 million adjusted, excluding stock-based compensation as well as additional items) on revenue of $1.3 billion. For the entire year of 2017, of which posted $199 million in profit ($288 million adjusted) on revenue of $1.7 billion.

The company has posted an annual profit for the last two years, according to the filing.

Parent company Tencent owns 58 percent of the music division. Spotify, which went public on U.S. exchanges earlier This kind of year, owns 9 percent of shares.

Tencent Music filed to list its shares on U.S. exchanges the symbol “TME.” Morgan Stanley as well as Bank of America are among the lead underwriters of the offering.

—Reuters contributed to This kind of report.

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