Spotify has finally filed to go public, and in doing so the Swedish company has shed light on another huge music company that has been tipped for IPO — Tencent Music — which is now valued at over $12 billion.
Tencent and Spotify announced a share swap in December that saw each side take an undisclosed slice of the other for strategic purposes going forward. According to Spotify’s filing, it took nine percent of Tencent Music Entertainment (TME) which it valued at €910 million at the time. That translates to a total valuation of €10.11 billion, or $12.3 billion, although Spotify includes 10 percent leeway above and below that figure.
In exchange, Tencent — which became Asia’s first $500 billion business last year — got 7.5 percent of Spotify to become one of its largest shareholders. It bought its stake using a mix of newly issued shares and secondary, but the value of that holding is around $1.5 billion based on a rough $20 billion valuation for Spotify.
TME was reportedly raising money at a valuation of around $10 billion in October, according to a Bloomberg report, and it has been tipped to raise as much as $1 billionin a listing that could happen this year. More color on this Spotify — both in terms of TME’s valuation and Tencent’s position as a major Spotify investor — give a little more insight into how the two companies might work together.
“Spotify believes the Tencent Transactions allow Spotify to invest in the long term potential of the music market in China and, in turn, TME to invest in the long term potential of the music market outside of China,” Spotify wrote in its filing.
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