In this Aug 12, 2019 photo, two men stand in front of the NetEase logo in Beijing. (PHOTO / IC)
The music streaming arm of Chinese mainland gaming giant NetEase Inc raised $422 million in its Hong Kong initial public offering, pricing the shares at the mid-point of a marketed range.
Cloud Village Inc sold shares at HK$205 ($26.30) apiece, according to terms of the deal obtained by Bloomberg. The company had marketed 16 million shares for HK$190 to HK$220 apiece, according to a preliminary prospectus. The shares will start trading on Dec 2.
READ MORE: JD.com, NetEase to get HK liquidity boost from MSCI shift
Cloud Village revived plans for an IPO after putting the listing on hold earlier this year, delaying it just days after the company began gauging investor demand. It had been pursuing an IPO of about $1 billion, Bloomberg News reported in May.
Cloud Village is still deep in the red in part because of costs stemming from its fierce rivalry with Tencent Music Entertainment Group
Cloud Village runs NetEase’s music streaming platform on the mainland and generates most of its revenue through subscriptions, virtual gifting and advertising. Started in 2013, the music wing has since expanded its products to offer everything from online karaoke to live-streaming and lyrics sharing.
The unit grew its monthly music users to 185 million in the first six months of 2021, according to the preliminary prospectus. Revenue rose 61 percent to 3.2 billion yuan ($501 million) for the six months ended June, while net loss more than tripled to 3.8 billion yuan for the same period.
ALSO READ: NetEase music wing Cloud Village to launch HK IPO
The company is still deep in the red in part because of costs stemming from its fierce rivalry with Tencent Music Entertainment Group. Cloud Village said in the prospectus that it has been negotiating deals with a number of music labels, after antitrust regulators in July ordered Tencent to give up its exclusive licensing agreements with big record companies.
Bank of America Corp, China International Capital Corp and Credit Suisse Group AG are acting as joint sponsors for the offering.