October 17, 2021

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Tencent Music’s prepare stalls for $5bn Hong Kong listing in 2021

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HONG KONG — Tencent Audio Leisure Group’s designs to promote up to $5 billion in shares when acquiring a listing in Hong Kong by the conclude of the 12 months are fading amid current market volatility and China’s crackdown on on the internet platforms.

The music streaming unit of Tencent Holdings, which elevated $1.1 billion in a New York initial general public presenting in 2018, has shed virtually 70% of its market value given that the inventory peaked in March. Whilst the firm’s need to listing in Hong Kong as a hedge against a attainable forced delisting in the U.S. is quite much intact, management is leaning towards putting off the sale until finally future yr, when industry and regulatory pressures might have eased, two persons acquainted with the transaction reported.

“A listing this 12 months is even now technically doable, but ever more it is on the lookout like it will be tough to fulfill the deadline,” reported a single of the men and women.

Tencent Music’s change comes after key rival Cloud Village, a device of gaming enterprise NetEase, resolved last 7 days to hold off its original general public featuring of up to $1 billion in shares in Hong Kong following encountering tepid opinions in preliminary conferences with investors.

Due in section to its dominance of China’s streaming industry, Tencent New music has been a focus on of level of competition regulators, who have turned their concentration to the country’s online platforms in modern months. Very last month, the organization was purchased to give up all unique tunes streaming legal rights in just 30 times and fined 500,000 yuan ($64,260) for unfair market practices.

Right up until it arrived under stress, Tencent Tunes held additional than 80% of unique new music library means in the state, in accordance to the Condition Administration of Industry Regulation.

The company has already mandated arrangers for the Hong Kong featuring, which include JPMorgan and Morgan Stanley, but preparations for the sale have slowed in recent days, the men and women stated.

A consultant for Tencent, which owns a the vast majority stake in Tencent Songs, declined to comment on the unit’s Hong Kong listing ideas. The firm is to release its quarterly outcomes later on Monday. 

With views towards Chinese online shares souring, the Hold Seng Tech Index has fallen 22% since the start off of July.

Tencent shares fell 3.5% on Monday to HK$453.80 right after a point out broadcaster said about the weekend that regulators really should tighten their oversight above video clip games to keep an eye on for historical distortions, the newest in a series of salvos from the gaming sector.

New share offerings in Hong Kong have also slowed over the past thirty day period right after a report start off to the calendar year, with market volatility dampening the outlook. About $32.5 billion was lifted in Hong Kong IPOs involving January and July, 85% extra than the exact interval a 12 months just before, but there is only a person IPO open up for membership at this time — a $210 million share sale by medical products maker Acotec Scientific Holdings.

Shanghai HeartCare Professional medical Technology, whose stock is scheduled to debut this Friday on the Stock Trade of Hong Kong, priced its offering very last Friday at the top rated of its promoted range to elevate $145 million, according to a individual common with the deal.

Though 21 companies have listed since the start of July, only electric car maker Xpeng and its rival Li Car qualified at least $200 million in proceeds. The two carmakers are already shown in the U.S. and lifted $1.8 billion and $1.5 billion, respectively.

Chinese corporations are ever more searching to list in Hong Kong to reduce disruption from doable delisting in the U.S. Underneath a legislation enacted past calendar year, Chinese firms danger currently being kicked off American exchanges by 2023 if U.S. regulators are not permitted to critique their audit information. Beijing forbids these reviews on nationwide safety grounds.

Additional reporting by Nikki Sunlight in Hong Kong

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