NEW YORK -- Tencent Music Entertainment Group, the music-streaming unit of Chinese internet services giant Tencent Holdings, set its initial public offering at $13 a share -- the floor of its indicated price range.
This still puts its market capitalization at about $21.3 billion, The Wall Street Journal reports. Roughly equivalent to Google's $23 billion debut in 2004, it could be the biggest IPO on the New York Stock Exchange since e-commerce company Alibaba Group Holding's record-breaking debut in 2014.
Tencent Music plans to list American depositary shares here as early as Wednesday.
The high market capitalization reflects the great growth potential of Tencent Music, whose January-September sales soared 84% on the year to $1.97 billion, with net profit roughly tripling to $394 million. The company offers four popular music apps in China, serving more than 800 million users each month. Its strength lies in its connection with parent Tencent's WeChat messaging app with 1 billion monthly users, which gives Tencent Music avenues to reach a large pool of listeners.
The number of Chinese companies going public in the U.S. has grown sharply in 2018. There were 31 such IPOs so far this year, compared with 17 for all of last year, according to Dealogic. Behind this boom is a bullish American equities market, mainly for tech stocks, enabling these companies to raise funds more easily than in Shanghai or Hong Kong.
But shares in Chinese businesses are now facing headwinds. Alibaba and search provider Baidu, both listed in New York, are down about 10% and more than 20%, respectively, since the start of the year. A decline in tech stocks since October and a Chinese economic slowdown have weighed on the shares, along with the Sino-American trade war.
The unstable market has also cast clouds over Tencent Music's IPO. It originally expected to list in October, only to delay its market debut by two months. The company originally sounded out investor demand with an opening price between $13 and $15 per share.