The music industry’s latest IPO is here.
Chinese tech giant NetEase’s subsidiary, Cloud Village – which operates the NetEase Cloud Music music streaming service – officially listed on the Hong Kong Stock Exchange today (December 2).
Cloud Village raised HK$3.28 billion (approximately US$421 million at current exchange rates) upon its IPO, with the share price set at HK$205 (approximately US$26.3), the midpoint of the indicative range of offer price set in the company’s pre-IPO prospectus.
As reported through BloombergCloud Village shares fell 2.5% to close at HK$199.90 (US$25.6).
Cloud Village’s pre-IPO prospectus revealed three “core investors” backing its listing, including current parent company NetEase, Orbis Investment Management Limited and Sony Music Entertainment.
The latter company has agreed to buy shares of Cloud Village worth $100 million, in accordance with an agreement signed by Cloud Village and Sony Music on November 22.
According to Cloud Village’s IPO pre-prospectus, with the final offering price set at HK$205 ($26) per share, this suggests that Sony Music’s $100 million investment has the major record label to acquire 3,801,000 shares in the brand new Cloud Village (see below). ).
Along with Sony Music’s $100 million investment, Orbis Investment Management has invested US$50 million in Cloud Village.
Additionally, Cloud Village’s parent company, NetEase, made a fundamental investment of US$200 million in the spin-off music subsidiary.
Cloud Village says it plans to use the net proceeds from its IPO, including the $350 million from these three foundational investments, to “cultivate its community, innovate and improve technology capabilities, select mergers, acquisitions and strategic investments, and general corporate objectives. .
Elsewhere in Cloud Village’s pre-IPO prospectus, the company revealed that its monthly active users (MAUs) of online music services grew from 173.2 million in the six months ended June 30, 2020 to 184.5 million. during the six months ended June 30, 2021.
NetEase Cloud Music Monthly paying users of online music services, meanwhile, more than doubled from 13 million in the six months ended June 30, 2020 to 26.1 million during the six months ended June 30, 2021.
According to NetEase, the company’s growth in online music service MAUs “is primarily due to our continued efforts to improve user experience, innovate interactive features, and enrich our content offerings.”
In a letter to investors today, NetEase CEO William Ding explained that NetEase Cloud Music’s ambition in the future is to become an “audio-centric universe”.
He added that “audio content is becoming more and more diverse” and highlighted music, podcasts, live streaming, karaoke, radio and other formats as “creating multi-faceted experiences and storylines “.
Ding added, “NetEase Cloud Music’s mission is to ’empower and connect people through music’. We care deeply about music. We care even more about people’s emotions, creations and inner worlds.
“Going forward, our Cloud Village will include more engaging content, features and capabilities, converting more basic users into active participants and creators. In the past, you may have simply used our platform to listen to music created by others.
“We strive to give independent artists the tools and resources to improve the effectiveness and depth of their creative endeavours. We understand that these are difficult tasks in uncharted territory. But we never leaned towards an easier path.
William Ding, NetEase
Ding also told investors that NetEase Cloud Music is “committed to investing in our support for independent artists.”
He continued, “For those who pursue music as their dream, we hope that you no longer have to worry about the right stage for your talent and passion, and that your family and friends no longer have to s worry about you financially.
“We hope you will see a music industry that moves towards improving quality, raising standards and changing tastes, where we will continue to be a driving force behind these positive changes.”
In conclusion, Ding explained that NetEase Cloud Music’s aspiration is “to aim for the global stage, empower independent artists to advance Chinese pop, and let the world hear China’s voices.”
He added, “We strive to give independent artists the tools and resources to improve the effectiveness and depth of their creative endeavours. We understand that these are difficult tasks in uncharted territory. But we never leaned towards an easier path.
“We have already proven ourselves when we first entered uncharted waters in Chinese original games and we will do so again for Chinese indie musicians and original music..”
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