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NetEase music IPO likely to be paused because of market uncertainty

By | Published on Tuesday 10 August 2021

NetEase Cloud Music

Plans by Chinese web giant NetEase to spin off its music division as a standalone publicly listed business are likely to be temporarily paused because of current market uncertainty around shares in China’s big tech companies.

NetEase – the second biggest player in digital music in China – announced plans to spin off its music division earlier this year, and confirmed at the start of the month that its planned Initial Public Offering of that division had been approved by the Hong Kong Stock Exchange.

However, according to Reuters, the internet company isn’t now rushing to get the IPO done. A planned launch of said IPO this week has been pushed back because – according to sources who spoke to the newswire – of the current uncertainties faced by China’s tech companies as a result of the ongoing crackdown by the country’s competition regulator.

China‚Äôs State Administration Of Market Regulation has been busy scrutinising the operations and deals of the country’s big tech firms in recent months, instigating various fines against various companies, in particular in relation to past mergers and acquisitions which, is says, did not comply with the relevant laws.

Within music specifically, NetEase could actually be a winner as a result of that crackdown, given that one of the outcomes has been its main rival in music, Tencent, being forced to end most of its exclusivity deals with rights-owners.

However, more generally the crackdown has created uncertainty and therefore caution among investment types when it comes to Chinese tech stock. And reports suggest that the gaming sector could be next in line for SAMR scrutiny, and that’s a key area of activity for the main NetEase company.

All of which, it seems, has convinced NetEase management that now is not the best time to proceed with the IPO of its music business, which seems likely to be postponed until there are better market conditions. Though NetEase itself is yet to comment on these reports.



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