NetEase is planning to go public with its music streaming business Cloud Village — a Spotify (SPOT) lookalike. The company aims to raise $500m in a Hong Kong listing before the end of 2021. This will be the first major Chinese listing after Didi’s (DIDI) much-criticized US IPO back in June. NetEase was probably reassured by the encouraging performance of its US-listed stock, which surged more than 16% in 2021.
This is not the first time that NetEase has considered an IPO of its music business on the Hong Kong stock exchange. Back in August, the company surfaced plans for an IPO that should have raised more than $1b. However, the volatile trading of major tech companies in China convinced NetEase to delay the listing. Now that the waters have calmed down, NetEase is ready to have another go at it.
Cloud Village is a major rival to Tencent Music. Tencent was a warning sign for Cloud Village when it delayed its IPO on the Hong Stock Exchange in early 2021. Now that NetEase has decided to float Cloud Village, Tencent could be tempted to follow through as well.
why it matters
The music industry is witnessing a new golden age thanks to the rise of social media and cross-contamination with other sectors. An example is Warner Music (WMG), which experienced a sales jump of 22% in the last quarter, driven by tunes on TikTok and Peloton (PTON).