The Chinese Internet company Tencent is planning to spin off its music division and go public in the United States. Even if details of the deal have not yet been communicated, one can already understand the dimensions of such an IPO (Initial Public Offering): The IPO could cost around 4 billion US dollars – with a valuation of the company of around 25 billion dollars.
For comparison: The Swedish competitor Spotify, which successfully launched in early April via direct placement on the New York Stock Exchange, was valued at around $ 26.5 billion at the time – the current price is just above the value that the company received during the first Trading day reached.
The first speculations about a Tencent spin-off already existed in April after Spotify launched. Both companies each own around nine to ten percent of each other’s shares – a fact that, excitingly, has resulted in higher analyst ratings for both companies.
The reasons for such a step can only be speculated: Of course it is fascinating for both partners to fish in each other’s waters. It remains to be seen whether the bill will work equally well for Tencent Music and Spotify. And the cooperation with Spotify, if it is not limited to financial matters, can open doors for Tencent Music with the big labels. After all, the western music market is still structured a little differently than other industries.
Tencent will conquer the west in the next few years
E-commerce, online advertising, social media, payment and video games – there is apparently no lucrative area that the Chinese Internet company leaves out. And that works damn well in the core market of China. In many cases, Tencent is following the country’s usual (and not disreputable) strategy of creative copying. As with a mashup, different technical features are linked and combined – with the aim of generating added value from the transfer. Tencent, that much is already clear today, is an issue for the large Internet companies in the western world and will leave its mark on the West in the next few years.