Tencent Music Entertainment Group has filed with financial regulators to be listed in the US.
The music arm of the technology giant Tencent Holdings could be set for one of the biggest US IPOs to date by a Chinese company. The move to spin off the streaming company follows the much-anticipated entry of China into the Top 10 music markets amid the global boom in streaming revenues.
Major labels have already partnered with Tencent Music in order to capitalise on the opportunities in China and Asia. Sony Music has launched a new dance label with the company to back local talent.
While Spotify is the market leader in key western markets following its $26.5 billion (£20.4bn) IPO, Tencent is set to expand further in the Asia region off the back of its US listing. It operates streaming apps QQ Music and Kugou, as well as karaoke app WeSing.
In its filing with the Securities and Exchange Commission, Tencent Music reported a profit of $263 million (£202.5m) and revenue of $1.3 bn (£1bn) for the six months ended June 30. Tencent Music has more than 700m monthly users, including around 15m paying subscribers.
According to the SEC filing, Warner Music Group and Sony Music Entertainment have recently acquired shares in the company for around $200m (£154.1m) in cash. Both companies were early investors in Spotify and made big gains when they cashed out stock after the IPO.
Tencent Music’s biggest shareholders include the parent company (58.1%) and Spotify (9.1%). Tencent and Spotify made joint equity investments late last year.
The company had been expected to announce plans to raise up to $4 bn (£3.1bn) but it ended up setting a placeholder listing of $1 bn (£770m), which is used to calculate registration fees. According to Thomson Reuters IFR, the final valuation of Tencent Music is set to be around $25 bn (£19.2bn).
Tencent Music could be the biggest Chinese listing in the US this year, ahead of the $2.4bn (£1.8bn) raised by video streaming service provider iQIYI in March