Press Releases in Hong Kong

NetEase’s music app files for US$1b Hong Kong IPO

In this Aug 12, 2019 photo, two men stand in front of the NetEase logo in Beijing. (Photo / IC)

Chinese mainland gaming giant NetEase Inc’s music streaming arm has filed for an initial public offering in the Hong Kong Special Administrative Region as the Tencent Holdings Ltd rival ratchets up competition in online content.

The Hangzhou-based firm has submitted a listing application for Cloud Village Inc to the Hong Kong stock exchange, according to a filing on Wednesday. Cloud Village holds NetEase’s music streaming platform in the mainland and also operates streaming and advertising through the platform. The filing didn’t provide details of the share sale.

The Hangzhou-based firm has submitted a listing application for Cloud Village Inc to the Hong Kong stock exchange, according to a filing on Wednesday

An IPO of the music unit could raise about US$1 billion, according to a person familiar with the matter, who asked not to be identified as the information is private. Jiemian and IFR reported the size of the offering earlier Wednesday. A representative for NetEase declined to comment.

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China International Capital Corp, Credit Suisse Group AG and Bank of America Corp are the sponsors of the deal, according to the filing.

NetEase has long been a distant runner-up to Tencent in gaming and music streaming. But William Ding’s company recently struck deals to license songs directly from Universal Music Group Inc and Sony Music Entertainment, ending the label giants’ exclusive arrangements with its much larger rival, Tencent Music Entertainment Group. 

NetEase’s innovative businesses — the division that includes NetEase Cloud Music — posted revenue of about 4.2 billion yuan (US$657 million) in the first quarter, a 40 percent growth from the same period a year ago. NetEase Cloud Music had more than 180 million active users in 2020, the filing shows. Tencent Music had about 615 million active users for the first quarter.

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In 2019, NetEase Cloud Music unit raised US$700 million from Alibaba Group Holding Ltd and founder Jack Ma’s Yunfeng Capital, following a previous round in which Baidu Inc, General Atlantic and Boyu Capital participated.