Tencent has confidence in a publicly traded Warner Music Group, to the tune of at least $200 million. According to a new SEC filing, TME scooped up 8 million shares of WMG Class A common stock on June 3, the day the major label began trading on the Nasdaq at an initial price of $25 per share. (The stock ended the day at $30.12, valuing Warner at $17.9 billion.)
Four million shares were purchased by Tencent Music Entertainment, a streaming company of which Chinese conglomerate Tencent is a majority owner. Another 4 million shares were bought by Huang River Investment Ltd, a wholly-owned subsidiary of Tencent Holdings Ltd, according to the Schedule 13G filed with the SEC on Friday (June 12).
With the transaction, TME holds 10.4% of total outstanding Class A in WMG, and roughly 0.8% of total common stock shares of all classes, the filing notes.
Tencent now owns 10% of two of the three major music companies, having paid $3.3 billion for a 10% stake — at a $33 billion valuation — in Universal Music Group in March. The relationships could give advantages to Universal and Warner in China’s fast-growing music streaming market. TME’s music apps had 657 million monthly listeners and 42.7 million subscribers as of March 31.
In the run-up to WMG’s return to Wall Street, that institution’s namesake news journal reported TME’s intended buy was in the $200 million realm.
It is currently trading at $30.40 at midday Friday, valuing the company at $18 billion.
All of the shares were sold by two entities — Access Industries and AI Entertainment Holdings — controlled by Len Blavatnik, who receives all the revenue from the stock sale with none of the proceeds going to the company. Blavatnik and other insiders retained an additional 433 million class B shares, of which the investment banks underwriting the stock offering have a 30-day option to purchase an additional 11.55 million shares.