(Bloomberg) – The music streaming arm of Chinese gaming giant NetEase Inc. is relaunching plans for an initial public offering in Hong Kong after suspending listing earlier this year.
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Cloud Village Inc. filed a preliminary prospectus on the Hong Kong Stock Exchange on Tuesday.
The unit could look to raise around $ 500 million in a bid as early as this year, according to people familiar with the matter who have asked not to be identified because the information is private. Cloud Village was pursuing a roughly $ 1 billion IPO, Bloomberg News reported in May.
Cloud Village decided in August to delay the IPO just days after starting to assess investor demand.
A representative from NetEase did not respond to requests for comment on the size of the list.
Cloud Village operates NetEase’s music streaming platform in China and generates most of its revenue through subscriptions, virtual gifts, and advertising. Launched in 2013, the Music Wing has since expanded its products to offer everything from online karaoke to live streaming and lyrics sharing.
The unit increased its monthly music users to 185 million in the first six months of 2021, according to the preliminary prospectus. Revenue rose 61% to 3.2 billion yuan ($ 501 million) for the six-month period ended June, while the net loss more than tripled to 3.8 billion yuan for the same period.
The company is still in the red, in part because of the costs associated with its fierce rivalry with Tencent Music Entertainment Group. Cloud Village said in the prospectus that it had negotiated deals with a number of music labels, after antitrust regulators in July ordered Tencent to waive its exclusive licensing deals with major record labels.
The Cloud Village prospectus offered a lengthy analysis of the potential risks of China’s new rules on data security and internet privacy. The company said it had not been involved in any investigation and had not received any requests or notifications about a proposed new rule that would require applicants for the Hong Kong IPO to pass a review. cybersecurity if the data they accumulated could have an impact on national security.
Bank of America Corp., China International Capital Corp. and Credit Suisse Group AG act as joint sponsors of the offer.
(Updates with exchange deposit details from the seventh paragraph.)
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