NetEase delays $1 billion Hong Kong listing of music streaming firm – sources

The logo of internet technology company Netease is seen at the China Digital Entertainment Expo and Conference, also known as ChinaJoy, in Shanghai
FILE PHOTO: The logo of internet technology company Netease is seen at the China Digital Entertainment Expo and Conference, also known as ChinaJoy, in Shanghai, China July 30, 2021. REUTERS/Aly Song/File photo

August 9, 2021

By Kane Wu and Scott Murdoch

HONG KONG (Reuters) – NetEase Inc has delayed the $1 billion Hong Kong initial public offering of its music streaming service Cloud Village because of volatile trading in China’s major tech companies, two people with direct knowledge of the matter said.

The people could not be named as the information was not yet made public.

A NetEase spokesperson said the company had no immediate response.

The IPO was approved by the Hong Kong Stock Exchange’s listing committee, according to filings lodged with the exchange, and preliminary meetings were held with potential investors last week.

The deal was due to launch this week but was put on hold on Monday, the sources said, given the uncertain conditions facing China’s tech companies following a regulatory crackdown ordered by Chinese officials.

NetEase’s Hong Kong listed shares lost nearly 14% last week after it was reported China’s gaming sector could be next in line for intensified regulatory scrutiny.

The stock is up 4.1% on Monday.

NetEase announced in May it would spin off Cloud Village and retain 62.4% ownership of the streaming business.

Due to its voting structure, NetEase also planned to retain no less than 50% of the voting power in the company following, according to its May regulatory filings.

Cloud Village had aimed to raise up to $1 billion in the Hong Kong IPO, one of the sources said.

Alibaba Group Holdings, Baidu Inc, General Atlantic and Boyu Capital are Cloud Village investors, according to the firm’s listing documents.

(Reporting by Scott Murdoch; Editing by Lincoln Feast.)