Hong Kong - Tencent Music Entertainment Group, controlled by China’s biggest social
network operator, is seeking new funding at a $10bn valuation
ahead of an initial public offering, people familiar with the matter
The operator of karaoke and Spotify-like streaming apps plans to sell
about 3% of its shares to strategic partners, including record
labels, one of the people said, asking not be identified as the details
Tencent, owner of the WeChat messaging service, held about
62.45% of the music group at the end of last year.
By forging an equity link with record labels, Tencent Music would be
securing its right to hold on to vital streaming rights in China’s
increasingly heated music market. Tencent spun out its music division
after merging it with China Music to win over a larger slice of a
domestic streaming market forecast to reach 4.37 billion yuan of subscription revenue by 2018.
The company, which competes with products from
NetEase, is scooping up content to cater to users who turn to the
web for entertainment and want services tailored to personalised
Tencent Music has
deals in place to distribute songs from artists including Beyonce and
Taylor Swift after signing up with some of the world’s largest record
Universal Music Group,
Warner Music Group and
Some of the other most influential record labels for the China market include
Huayi Brothers Media and Korea’s
YG Entertainment, both of which have distribution deals with Tencent.
Tencent Music declined to comment in an emailed statement.
Tencent mainly distributes music via its QQ Music, Kugou and Kuwo
apps, which have a combined 600 million monthly active users. The apps
provide a free-to-stream service and a subscription mode. The company
also operates a live streaming service and a karaoke app.
Tencent Music makes money via subscription, advertisement, and sub-licensing its content to other companies including Netease.
reported in April that Tencent Music was planning for an IPO.
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