NetEase Cloud Music, the music streaming arm of Chinese tech giant NetEase, is planning to raise up to HKD $3.52 billion ($451.9 million) from an initial public offering (IPO) in Hong Kong, after shelving it earlier this year amid an environment of tightening regulation from Beijing on the country’s private sector. The streaming platform will sell 16 million shares and has set a price range of between HKD $190 and HKD $220 a piece, the company said Tuesday.
The co-sponsors of NetEase Cloud Music are Bank of America Securities, China International Capital Corporation Limited and Credit Suisse. Shares are expected to start trading on the Hong Kong stock exchange on December 2, with the code “9899.HK.”
It is estimated that the valuation of NetEase Cloud Music will be between HKD $39.47 billion and HKD $45.71 billion after listing. According to the prospectus, the music company introduced NetEase, Sony Music Entertainment and Orbis as cornerstone investors, with a total investment amount of $350 million.
This is also the first time that Sony Music Entertainment has served as the cornerstone investor for the Hong Kong IPO of a Chinese digital music company. Both parties reached a copyright cooperation deal in May this year.
Orbis, another cornerstone investor of NetEase Cloud Music, as well as the largest institutional shareholder of NetEase, has established a long-term and stable investment cooperation relationship with the firm. This cooperation is the second one between the two parties after the U.S. listing of NetEase Youdao.
As the controlling shareholder and cornerstone investor of NetEase Cloud Music, NetEase also continues to be optimistic about its music arm’s long-term development. According to previous data, assuming that the over-allotment shares have not been exercised, after the IPO, NetEase will hold over 60% of shares in NetEase Cloud Music.
According to the latest prospectus, in the first three quarters of 2021, NetEase Cloud Music’s total revenue was 5.1 billion yuan ($798 million), a year-on-year increase of 52%. The platform’s monthly active users reached 184 million. The number of online music paying users was 27.52 million, a year-on-year increase of over 93%.
This year, global capital markets continued to fluctuate, causing many internet companies to decide to suspend their IPO process. Recently, with the stabilization of the market, HKEx has released a number of positive signals, including optimizing and broadening the second listing mechanism, and including NetEase, JD.com, China Resources Beer, ENN Energy and other stocks in the Hang Seng Index, so as to attract more enterprises to come to Hong Kong for a listing.