Three leading Chinese technology firms, Tencent Music Entertainment Group, online retailer Vipshop, and live-streaming platform Joyy, are currently seeking secondary listings in Hong Kong to raise over $7 billion in total, according to four people familiar with the matter.
Tencent Music Entertainment Group is planning to raise $3.5 billion and Vipshop plans to raise $2.5 billion, while Joyy is planning to raise half of $1.75 billion. The sources said that Vipshop and Joyy are planning to launch their listings in the second or third quarter of 2021 if they secure the regulator’s approval, while Tencent hasn’t revealed its listing schedule. At the time of this article’s publication, Tencent Music Entertainment Group and Vipshop declined to comment and Joyy did not respond to requests for comment.
Some experts estimate that this move is to prevent the likely threats from America’s executive order to push Chinese firms out of the country. All three firms had been planning to list in New York, but the confrontational Sino-American relationship has been deteriorating their plans to expand overseas.
“We have seen clients putting their U.S. IPO plans on hold for now,” said Stephen Chan, a partner at law firm Dechert LLP in Hong Kong. “The underlying reason for the slowdown is the relationship between the U.S. and China. If tensions between the two nations remain, we would expect the slowdown to continue.”
Per Reuters, there are more than 550 Chinese firms currently listed on U.S. exchanges. Despite China’s regulators encouraging top domestic firms to list at home, many Chinese firms choose New York for listings due to its large international investor base.
“For U.S. investors, it will mean fewer listings and it will be harder to capture the benefits of growth in China,” said John Ott, partner with Bain & Company and a leader within its Greater China financial services practice.
Even though the world’s top two economies’ conflict has not cooled down, many tech giants have seen new opportunities amid the pandemic. Tencent Music’s paying subscribers of its online music service surged by 50% to 42.7 million in March 2020. The firm’s monthly revenue per paying user has also increased by 13%.
“We have seen some behavioral changes during the lockdown and observed an increasing number of users listening to music with home appliances, especially TVs and smart devices,” said Cussion Pang, Tencent Music’s chief executive.