Corporate Finance

Tencent Music Shares Jump in Early Trading

Shares were up 10% on their first day of public trading.
William SprouseDecember 12, 2018
Tencent Music Shares Jump in Early Trading

Tencent Music Entertainment Group shares were up 10% in early trading. The company, the music arm of Chinese tech giant Tencent Holdings, raised nearly $1.2 billion in what was one of the most hotly anticipated offerings of the year.

Tencent priced its initial public offering at $13 per share, the lower end of its targeted range. At $13, the IPO gives Tencent an implied market value of $21.3 billion, according to data provider Dealogic. The American Depositary Receipts are trading on the New York Stock Exchange under the ticker symbol TME.

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The offering comes amid uncertainty in global markets as fears of an ongoing trade war between the United States and China cloud the investment horizon. Tencent reportedly planned to offer shares in October but decided to delay the sale.

Tencent owns four of the largest music apps in China and said it has 800 million monthly active users. The company reported a net profit of $436 million for the first nine months this year.

The deal is the fourth-largest IPO among Chinese companies this year and the third largest Chinese IPO in the United States, according Dealogic. Streaming video platform iQiyi raised $2.3 billion in March. Social shopping app Pinduoduo raised $1.6 billion in July. As of December 10, the 31 Chinese IPOs in 2018 were down an average of 11%, according to Dealogic. Alibaba raised more than $20 billion in an IPO in 2014.

In a filing with the Hong Kong stock exchange, Tencent said it sold 41 million ADRs; existing shareholders sold an additional 40.9 million ADRs.

The U.S. music streaming platform Spotify, which held its own IPO last spring, owns about 9% of Tencent. Tencent Holdings owns 58%.

Bank of America, Deutsche Bank, Goldman Sachs, JPMorgan, and Morgan Stanley were the lead underwriters.