China’s second-largest gaming company NetEase has delayed the $1 billion Hong Kong initial public offering of its music streaming service Cloud Village, Reuters reported, citing sources familiar with the matter.
Details: The deal was due to launch this week but was put on hold on Monday, the report said, given the uncertain conditions facing China's tech companies following a regulatory crackdown ordered by Chinese officials.
Last week, NetEase got the approval from the Hong Kong Stock Exchange to spin off Cloud Village, the operator of NetEase Cloud Music streaming service.
The gaming giant would hold at least 50% of the voting rights of Cloud Village and the company would remain a NetEase subsidiary following the IPO. NetEase owns 62.46% of Cloud Village’s total issued share capital.
NetEase Cloud Music had more than 180 million monthly active users for its music streaming service in 2020.
Context: NetEase Cloud Music tails after Tencent Music in China, as the latter holds the exclusive copyright of a large number of trendy songs. However, as China has stepped up its suppression of technology companies' monopolies, Tencent Music can no longer keep exclusive licensing deal with the three major record companies, including Sony Music, Universal Music Group and Warner Music Group, which gives NetEase Cloud Music a chance to catch up.
Last June, NetEase itself raised $2.7 billion in a secondary listing in Hong Kong, two decades after its IPO on the Nasdaq.