Tencent, China's largest social media platform, has announced on Tuesday that it is filing for an Initial Public Offering (IPO) in the United States for its music-streaming division, Tencent Music Entertainment Group for USD$1 billion, one of the largest IPOs made by a Chinese company in the US stock market, the report from China Money Network said.
The amount is thought to be a placeholder which the company has foreseen that it could easily increase in a few years, as suggested on Tencent's regulatory filing with the US Securities and Exchange Commission (SEC).
Tencent dominates China's entertainment sphere with its four music apps - music streamers QQ Music, Kugou Music and Kuwo Music as well as it's famous online karaoke sing-a-long application called WeSing.
In its own turf, the tech firm boasts more than 800 million new active users signing up for their services per month during the second quarter of 2018 (April to June).
However, this figure does not entirely account premium customers or those who paid for the company's full-featured services. As pointed out by WCCFTech, Tencent has only around 3.6 percent from the sum as paid users of one of those aforementioned apps.
Regardless, this slice of the pie equates to a whopping 31 million premium subscribers of the entertainment service, a feat considered very respectable in the music streaming market and almost at par with Apple's 50 million paying users, and Spotify's 75 million.
Interestingly enough, Spotify is one of Tencent's main investors. The industry competitor holds around 9 percent stake in the company. Sony and Warner Music, meanwhile, have acquired shares in the firm for USD$200 million in cash, according to this report from Variety.
Parent company Tencent, on the other hand, owns more than half of the company.
As further indicated in the details provided over by the filing, and as cited by CNBC, Tencent Music alone has reported a profit of between USD$263 million to USD$320 million, as adjusted with the exclusion of stock-based compensation and other items, on revenue of USD$1.3 billion for the first six months of this year.
In 2017, TME (Tencent Music Entertainment) reported USD$199 million in profit on its ROI of USD$1.7 billion.
Western Invasion
TME has already seen collaboration with Western entertainment icons such as pop singers like Katy Perry and Rihanna, two of whom the Chinese populace received very well. Alongside these names, home-grown stars like Jason Zhang and Joker Xue have been making waves among its ardent followers.
