Tencent Music Entertainment has delayed its planned US initial public offering until November as the owner of China’s most popular music apps opts to wait a little longer for global stock markets to stabilize, according to three sources familiar with the matter.
The music arm of the tech giant Tencent Holdings is anticipated to raise at least $2 billion and was originally aiming to launch its offering as soon as next week, according to the sources.
On the other hand, Wall Street on Wednesday suffered its worst one-day drop in eight months, with the S&P 500 down 3.29 percent. The index shed 2.06 percent more on Thursday.
“Are they really going to launch into this window?” said one of the sources who were involved in the deal, adding that the company had plenty of cash. “Why try and jam something out now?”
Chinese shares have also fallen, with the CSI 300 index of mainland Chinese blue-chips down 4.8 percent to a 27-month low on Thursday.
“Given the recent challenging market conditions, it won’t be a good idea for the company to go ahead with the listing timetable. It makes more sense to wait till the market recovers a bit,” said another source with knowledge of the matter.
Tencent Music declined to issue a comment. The sources did not want to be identified because the information was confidential.
At $2 billion, the IPO would be among the largest ones by a Chinese company in the United States this year, falling just behind the $2.4 billion raised by video streaming company iQiyi in March but larger than the $1.6 billion gathered by online group discounter Pinduoduo in July.
In total, Chinese companies have raised $7.5 billion from US markets so far this year – the largest amount since 2014 – according to Refinitiv data.
Tecent Music filed for its IPO earlier this month, setting a placeholder sum of $1 billion for registration purposes.
The company owns streaming apps QQ Music, Kugou, and Kuwo as well as karaoke app WeSing, and claims more than 800 million monthly active users.
The number of Tencent Music shares to be sold has not been disclosed and potential valuations were still unclear. Its Swedish music streaming counterpart Spotify Tec hnology SA is currently valued at around $27.1 billion.
The Chinese firm, which has cross shareholding deal with Spotify, offers more in the way of socially interactive services that makes it profitable, while the Swedish firm is not. Tencent Music reported a 92 percent jump in sales in the first half of this year and net profit of $263 million.
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