Chinese tech giant Tencent is in talks to invest US$200 million to buy a stake in Warner Music Group ahead of the record company’s initial public offering, the Wall Street Journal reported, citing people familiar with the matter.
Photo credit: Tencent
Warner Music is also working to add other anchor investors to invest more than US$1 billion towards its fundraising goal of up to US$1.8 billion, the sources said.
The IPO, which is expected to price between US$23 and US$26 per share, is predicted to give the company a valuation of as much as US$13.3 billion. It could be the largest New York IPO so far in 2020, according to the report.
Warner Music – home to popular international artists such as Cardi B, Ed Sheeran, and Bruno Mars – had initially announced its plan to go public in February but delayed it due to Covid-19.
The report on Tencent’s potential investment in the company comes after a Tencent-led consortium acquired a 10% stake in Universal Music Group for nearly US$3.4 billion. The deal brought the company’s market value to around US$33.7 billion and gave Tencent access to artists such as U2, Drake, and Taylor Swift.
Tencent’s music service Tencent Music Entertainement reported a total of US$891 million in revenue for the first quarter of this year, up 10% year over year. The unit, dubbed China’s Spotify, currently has 657 million mobile monthly active users, with 6% paying for its services.
Most recently, Tencent said it raised a total of US$6 billion in debt financing. It also announced plans to invest US$70 billion in technologies such as cloud computing and AI over the next five years.
Editing by Charmaine de Lazo
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