Tencent plans US listing of music unit

Chinese internet giant Tencent Holdings was planning to spin off its online music entertainment business and list its shares in the US through an initial public offering (IPO), the company said in a filing with the Hong Kong stock exchange on Sunday. Tencent, China’s largest social media and gaming company, said terms of the proposal, including size, price and range, had not yet been finalised.

Tencent Music Entertainment Group had picked banks to advise on a planned IPO in the US that could raise at least $1bn, people with knowledge said in May. The announcement follows a similar move by Tencent in 2017 in Hong Kong with its online reading business, China Literature.

Its music platforms — QQ Music, KuGou and Kuwo — are becoming important vehicles for pop stars such as Katy Perry and Rihanna to reach a Chinese audience, alongside homegrown artists such as Jason Zhang and Joker Xue.

Tencent has the advantage of a fully developed entertainment and content empire that encompasses the ubiquitous WeChat messaging app, games, videostreaming, a karaoke app and content licensing deals with more than 200 international and domestic record companies.

But like perennial rivals Alibaba, Baidu and Netease, Tencent has to contend with the rampant piracy that is eroding the industry’s profits.

It also counts Spotify as an investor and partner. While the companies do not compete in China, they come up against each other in regions such as Southeast Asia as both look for growth.