Stock in Tencent Music Entertainment Group climbed 7.7% above the company's initial public offering price for its U.S. trading debut, ending Dec. 12 at US$14.00 per share.
The music unit of Chinese tech giant Tencent Holdings Ltd., which began trading Dec. 12 under the symbol "TME" on the New York Stock Exchange, had priced its public offering at US$13 per American Depositary Share — the low end of an expected range of US$13 to US$15. The offering, which raised about US$1.07 billion before the exercise of the underwriters' overallotment option, ranks as the largest IPO in the music services and publishing industry since 2000. The highest sector IPO of the current millennium to date is Warner Music Group Corp.'s US$554.2 million offering in 2005, according to data compiled by S&P Global Market Intelligence.
Spotify AB parent company Spotify Technology SA made its market debut earlier this year via a direct listing, raising over US$900 million while bypassing the traditional IPO listing structure and pricing without the assistance of bank underwriters. Spotify's stock began public trading in April at US$165.90 per share, or 26% above the NYSE's reference price of US$132. Shares of Spotify Technology closed Dec. 12 at US$128.47, roughly flat for the day.
Tencent Music had planned to go public in October, but postponed due to a sell-off in global markets fueled by trade tensions with China and concerns around worldwide economic growth. Tencent Music said Dec. 11 that the gross proceeds from its U.S. listing could rise to nearly US$1.23 billion if the offering's underwriters exercise their overallotment option to purchase up to 12.3 million additional ADSs in full. The option can be exercised within 30 days from the final prospectus.
Tencent Music had more than 800 million total unique monthly active users as of the end of the third quarter, according to an SEC filing. As of September, the company's music content library had over 20 million tracks from over 200 domestic and international music labels. The firm operates the QQ Music, Kugou Music, Kuwo Music and WeSing music apps.
Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Deutsche Bank Securities Inc. and Goldman Sachs (Asia) LLC are among the lead underwriters of Tencent Music's public offering.