NetEase launches $ 500 million initial public offering for its music business


Cloud Village, the music streaming arm of NetEase, runs the NetEase Cloud Music app, which is shown in this photo on a smartphone.

Fan Jianlei | Visual China Group | Getty Images

GUANGZHOU, China – NetEase has launched an initial public offering (IPO) of its Hong Kong music company Cloud Village, which could raise approximately $ 500 million.

Cloud Village will offer 16 million shares at a price between Hong Kong dollars 190 and Hong Kong dollars 220. The final price has not yet been determined.

There is an option to issue a further 2.4 million shares as part of an over-allotment option.

At the higher end of the range, Cloud Village would raise approximately $ 4.04 billion (US $ 519.6 million), excluding fees and other IP-related expenses.

Cloud Village operates NetEase’s music streaming business and the company claims it has 185 million monthly active users. Revenue rose 51.5% year-over-year to 5.1 billion yuan ($ 799.6 million) for the nine months ended September 30, but is still suffering heavy losses as it squeezes market share in the music streaming business of Tencent fights.

The company’s income comes mainly from subscriptions, advertising, and buying virtual items on its platforms.

NetEase originally filed for listing of Cloud Village in August but allegedly delayed its IPO due to volatile markets.

In the past year, the Chinese technology sector has faced a tightening regulatory environment in areas from antitrust law to data protection, which has hurt the stock prices of many of the country’s giants.