The music arm of Chinese internet conglomerate Tencent Holdings is all set to launch an initial public offering. However, before the IPO launch, Tencent Music Entertainment Group is seeking new funding at a $10 billion valuation, according to a Bloomberg report.
The report added that Tencent Music plans to sell about 3 percent of its shares to strategic partners, including record labels. Tencent Holdings holds around 62.45 percent in the music company.
By forging an equity link with record labels, Tencent Music would be securing its right to hold on to vital streaming rights in China’s increasingly heated music market.
In July 2016, Tencent announced announced a strategic merger with China Music Corporation to develop the digital music business in China and launched its music arm. The Chinese music streaming market forecast to reach 4.37 billion yuan ($664 million) of subscription revenue by 2018.
Tencet Music competes with products from Alibaba Group Holding Ltd. and NetEase Inc.
The company has also sealed deals to distribute songs from artists including Beyonce and Taylor Swift after signing up with some of the world’s largest record labels, including Universal Music Group, Warner Music Group and Sony Music.
Besides, it also has distribution deals with some of the other most influential record labels for the China market such as Huayi Brothers Media Corp. and Korea’s YG Entertainment.
Tencent owns music apps such as QQ Music, Kugou and Kuwo apps, which have a combined 600 million monthly active users. The apps provide a free-to-stream service and a subscription mode.
Tencent Music’s business model is based on subscription, advertisement, and sub-licensing contents to other companies.