Tencent Music Entertainment Group, the music arm of Chinese technology giant Tencent, will delay its initial public offering (IPO) in the United States after global stock markets encountered turbulence in recent weeks, according to reports.
The popular music streaming service provider will postpone the IPO to at least November due to its recent global sell-off, and Tencent wants to wait until the market stabilises, both The Wall Street Journal and Reuters reported last week, citing anonymous sources.
The music arm of Tencent will reportedly raise at least $2 billion, with the company originally planning to kick off the offering as soon as this week, according to Reuters.
Parent company Tencent, which owns 58 percent of the music division, had announced in July in a stock filing that it was seeking to spin off Tencent Music and aim for a listing in the US. Spotify also owns 9 percent of shares in Tencent Music following a share swap last year.
Tencent is leading the Chinese music streaming market as its four music apps, Tencent Music, QQ Music, Kugou Music, and Kuwo Music, hold a combined 76 percent of the Chinese music streaming market.
The music app reported a total of more than 800 million monthly active users in the second quarter of this year. On average, users spent more than 70 minutes on the platform each day, a Chinese report said, citing its prospectus.
Although its number of paid users, sitting at 3.6 percent of its total 23.3 million users, is far behind Spotify's 43 percent, Tencent Music had reported strong growth in the first half of 2018, with its revenue increasing by 92 percent to 8.6 billion yuan while adjusted profit reached 2.1 billion yuan, up 189 percent from the same period in 2017.
But Tencent Music's highly anticipated IPO has been disturbed by the recent sell-off, especially among technology shares. On Wednesday, Wall Street suffered its worst one-day drop in eight months, with the S&P 500 dipping 3.3 percent and dropping a further 2 percent the following day.
In Hong Kong, where shares of Tencent are traded, the Shenzhen-based technology giant, which was once the most valuable company in Asia, fell by 6.8 percent on Thursday. It has lost more than $250 billion in market value since late January after the Thursday slump.
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The three Spotify-like music-streaming platforms controlled by Tencent own about three quarters of the entire market in China.
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