On Wednesday morning, the freemium music streaming platform NetEase Cloud Music was priced at HK $205 ($26.29) per share, the midpoint of the file price range. NetEase Cloud Music plans to be listed on the HKEx on December 2 with the stock code “9899”. After this financing, NetEase Cloud Music will raise a total of HK $3.28 billion ($420.72 million) and have a market value of HK $42.59 billion.
People familiar with the matter revealed that NetEase Cloud Music’s international placement went well, and it has been fully subscribed for half a day after the sale had started. At the same time, the company isattracting many different types of funds, including global long-term funds, investment funds focusing on the new economy fields and hedge funds.
According to public information, on May 26 of this year, NetEase Cloud Music submitted its listing application to the HKEx and updated its post-hearing data set on November 16. Later, on November 23, NetEase Cloud Music announced the launch of its initial public offering in Hong Kong. The co-sponsors of the listing were BofA Securities, CICC and Credit Suisse.
According to the prospectus, NetEase, Sony Music Entertainment and Orbis will serve as cornerstone investors, with a total subscription of $350 million.
The prospectus also shows that NetEase Cloud Music plans to use the funding raised this time mainly to the music community, enriching diversified music content and improving technical capabilities. The company will also invest in a selection of mergers, acquisitions and strategic investments, operations and general enterprise purposes.
NetEase Cloud Music was launched in 2013 and has now developed into the largest online music community in the world. Its main revenue comes from online music and social entertainment services. According to the prospectus, NetEase Cloud Music had a revenue of 5.1 billion yuan ($801.55 million) in the first three quarters of this year, and its gross profit margin increased significantly, turning positive to 0.4%. The number of monthly active users increased to 184 million, and the number of paying online music users registered on the platform reached 27.52 million, a year-on-year increase of over 93.2%. The online music payment rate reached 14.9%.