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Company News: Tencent Music Entertainment Group, China's No.1 Music Streaming Company, Listed in NYSE, Shenzhen Capital Group's 143rd IPO

2018.12.12

On December 12, 2018,Shenzhen Capital Group’s portfolio company, Tencent Music Entertainment was listed on the New York Stock Exchange and became the 8th IPO of Shenzhen Capital Group in 2018, and the 143rd since its establishment. Tencent Music is not only the first music platform listed in China, but also the world's first music platform to achieve profitability. Its listing is a milestone for the Chinese and global music market.

As the leader of online music services in China, Tencent Music covers music streaming platforms (Kugou Music, QQ Music, Kuwo Music), music communities (National K Song, Tencent Musician, 5Sing), and performing arts live broadcast platforms (Kugou Music, QQ Music, and Kuwo Music). The prospectus shows that in the first three quarters of 2018, Tencent Music achieved operating income of 13.588 billion yuan, a year-on-year increase of 83.7%, net profit of 2.707 billion yuan, a year-on-year increase of 244.8%, and adjusted profit of 3.257 billion yuan.

Tang Daosheng, Senior Executive Vice President of Tencent Group and Chairman of Tencent Music, said at the listing ceremony: “Tencent Music’s mission is to bring the most diverse and richest music experience to everyone in China who loves music. Tencent Music does not only focus on users. At the same time, we are constantly exploring how to connect people through music socialization. Music has always been an important part of the entertainment content strategy for Tencent. It is built together with long videos, short videos, online games, online literature, and podcasts. And the entertainment ecosystem that defines China’s pop culture. Tencent will continue to help Tencent Music develop in many ways, such as the distribution of popular film and television drama songs, and the joint production of music programs with Tencent Video to support Tencent Music’s continued exploration and leadership in the music field."

In this IPO, Tencent Music issued a total of 82 million American Depositary Shares (ADS), of which about 41.03 million were new shares issued, and about 40.97 million were from the company’s selling shareholders at an issue price of US$13/ADS. On the first day of listing, Tencent Music had an opening price of US$14.15 and a closing price of US$14, a 7.69% increase from the issue price. Based on the closing price, the market value of Tencent Music is approximately US$22.9 billion (approximately RMB 157.5 billion).

Shenzhen Capital Group invested in Kugou Music for the first time in 2012. After the investment, Kugou Music successively merged with Ocean Music and QQ Music to become the leader of China's music streaming industry and was renamed Tencent Music Entertainment Group in 2017. Shenzhen Capital Group increased its investment twice to boost its development. Before this public listing, Shenzhen Capital Group was the seventh largest shareholder of Tencent Music. Calculated based on the closing price on the first day of listing, the valuation of the investment of Shenzhen Capital Group increased by 314 times compared with the valuation of the investment in 2012.

Ma Yanzhao, Chief Financial Officer of Shenzhen Capital Group, Cao Xuguang, Executive General Manager of Shenzhen Capital Group, Special Assistant to the Chairman of Shenzhen Capital Group, and Li Li, Chief Partner of West Fountain Parallel Fund, were invited to attend the listing ceremony of Tencent Music.