Tencent Music shares rise in Hong Kong debut as Asia’s third-largest capital market stirs from listing slump
- TME opened at HK$18 each or 0.1 per cent above its American depositary shares, which closed at the equivalent of HK$17.98 in New York on Tuesday
- TME shares, which are fully fungible with their ADSs, ended trading in Hong Kong at HK$18.22
Tencent Music Entertainment Group (TME) rose in Hong Kong when its shares began trading in Asia’s third-largest capital market, as investors piled into China’s largest online music platform operator owned by Tencent Holdings and backed by Spotify.
TME’s shares began trading at HK$18 each under the 1698 stock code and closed at HK$18.20 in Hong Kong trading. That’s 1.2 per cent above the company’s American depositary shares or ADSs, which last traded at US$4.58 (HK$35.95) in New York on Tuesday. Each ADS represents two TME Class A shares in Hong Kong.
TME listed in Hong Kong by way of introduction, a quicker and easier route than normal initial public offerings (IPOs), without raising any additional capital from investors. The positive response to its listing is a shot of confidence for the growing queue of Chinese companies that are seeking a sanctuary closer to home amid rising US-China tension.
Executive Chairman Cussion Pang Kar-shun and Chief Strategy Officer Tony Yip Cheuk-tung struck a ceremonial gong at the Hong Kong stock exchange at 9.30am with mallets wrapped in red cloth to mark the commencement of trading.
TME is the largest online music platform in China, with at least 766 million monthly active users in the first quarter. Net profit fell 23 per cent to 3.2 billion yuan (US$454 million) last year, while revenue rose 7.2 per cent to 31.2 billion yuan.
The company sold 82 million depositary shares at US$13 each in December 2018 on the way to its New York listing. The ADSs are fully fungible, or convertible, with its Class A shares listed in Hong Kong. Spotify owned 16.9 per cent of TME’s shares, based on holdings as of April 19.
JPMorgan and Goldman Sachs are the joint sponsors of TME’s listing, while Morgan Stanley, CICC, HSBC and UBS are the joint financial advisers.
TME’s listing by introduction came amid a flurry of IPO and secondary listings in Hong Kong, as nearly 200 companies that have been given the go-ahead to list dust off their plans. Hong Kong’s IPO proceeds plunged 92.5 per cent in the first half to a two-decade low of US$2.3 billion.
Chinese electric-car maker Zhejiang Leapmotor Technology unveiled its HK$8.1 billion stock offering this week, becoming the fifth new-energy vehicle (NEV) producer to raise funds in Hong Kong, after BYD, Nio, Xpeng and Li Auto.
Also this week, China’s third-largest developer by sales China Vanke started taking orders to raise as much as HK$6.15 billion by selling 116.7 million shares in its Onewo property-management services unit.
Author: Cheryl Heng, SCMP