Tencent Music files for IPO in the USA: Warner and Sony buy $200m of shares

Tencent Music Entertainment Group (TME) – the largest music streaming company in China, but also the owner of QQ Music, Kugou, Kuwo and WeSing – has officially filed for IPO in the US. As "Music Business Worldwide" reports, in an F-1 filing uploaded today to the Securities and Exchange Commission (dated October 2), TME listed a placeholder registration for $1bn and applied to list on the New York Stock Exchange and NASDAQ Global Market.

The F-1 shows some financials about Tencent Music: in the six months ended June 30 this year, the company’s revenues grew to 8.62bn yuan (US $1.3bn) compared to 4.49bn yuan in the same period of 2017. Gross profit in H1 2018 jumped to 3.48bn yuan ($526m) versus the prior-year period’s 1.38bn yuan – a 151.7% year-on-year rise.

But there's more. As "MBW" reports, according to a note in the F-1 prospectus, both Warner Music Group and Sony Music Entertainment have acquired shares in TME, for approximately $200m. The two parties have divided a total of 68,131,015 ordinary shares in TME between them. The $200m deal went down on October 1 and Universal Music Group is not mentioned as a recipient of shares.

As explained by "MBW":

Under the agreements, shares held by Warner and certain shares held by Sony will be subject to a lock-up which will expire upon the earlier of the following: the third anniversary of the completion of the IPO of TME, or on October 1, 2021 –  subject to limited exceptions.

The remaining shares held by Sony will be subject to a lock-up that will expire upon the earlier of the following: the end of six months following the completion of the TME IPO or April 1, 2019. This is also subject to limited exceptions.

Warner and Sony can request TME to repurchase the shares held by them at their subscription price if there is no successful IPO by the end of 2019.