China’s Tencent Music Entertainment has postponed its plans to go public amid a global equity sell-off last week led by technology shares, according to three people briefed on the matter.
The music streaming company was being hived off from Tencent, an internet gaming, social media and payments group that operates China’s largest mobile chatting application, WeChat.
Plans were to list the week of October 22 with a roadshow to market the shares to investors set to begin on Monday, forcing the company and its bankers to make a call now on whether to proceed.
TME declined to comment. Underwriting banks Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs, JPMorgan and Morgan Stanley also either declined to comment or were not immediately available.
“The view is it’s just the smart thing to do,” one banker said of the IPO’s postponement. “There’s no point rushing into a volatile environment. It’s not like the company is struggling for cash.”
Unlike many other Chinese groups that have listed publicly this year, TME is profitable, taking in about $263m in the first half of the year, according to a regulatory filing.
In September, three people with direct knowledge of the deal said the company would seek to raise at least $2bn at a valuation of about $30bn, which would make it one of the largest tech listings, according to Dealogic.
The listing of its music streaming business—an amalgamation of Chinese companies it acquired and rolled up—was set to be Tencent’s biggest in a banner 18 months for IPOs from the tech conglomerate.
It has listed more than a dozen companies from its stable and, despite some debuts that saw companies such as China Literature roughly double in value, almost all have faltered and many are now below their issue price.
Competition has also intensified, with the emergence of Bytedance, a Chinese technology group that is not backed by either Tencent or rival Alibaba. SoftBank is in talks to invest in the online news and entertainment group that would value it at $75bn.
Source: The FT