The Chinese Multinational Conglomerate Tencent broke into the US music market after purchasing stake from recording giant Universal Music Group (UMG) at the beginning o the year. Tencent has now continued their pursuits into the music market, by acquiring a $200 million stake in Warner Music Group (WMG), via Tencent Music Entertainment and Tencent Holdings, which each own a 5.2 percent stake in WMG, for a total of 10.4 percent of the company’s total outstanding Class A common stocks.
“We invested in Warner because of the positive outlook for the global music market, and our aim of working closely with labels to drive the pace for streaming models in China,” a representative from the company told Variety.
While the group now has stock in two of the big three major US record labels, these stock holdings are non-controlling, meaning that they do not have authority over the company’s affairs. The company has the option to purchase another 10 percent stake in UMG in the near future.
Tencent launched its own music IPO in 2018 and swapped stake with 10 percent of Spotify during the end of 2017, effectively giving the company a foothold in the music streaming market. Both WMG and UMG have stake in Spotify as well.
WMG launched with a successful IPO at the beginning of the month, with its shares going up by 20 percent in the first day of trading. The company currently sits at $32.09 per share after opening at a valuation of a $35 price per share. Many investors are looking toward the potential the company brings in from streaming revenue, as it hosts a plethora of work from prominent artists such as Ed Sheeran, Cardi B and Charli XCX.