It’s been known for some time that Chinese tech firm Tencent is in talks to buy a 10% stake in Universal Music Group, with an option to acquire another 10% for up to a year afterwards. The deal is thought to value UMG at around €30bn, but now there’s been a development: Tencent may not be making the investment alone.

“Tencent Holdings Ltd. is in talks with potential co-investors for its proposed bid,” reported Bloomberg, citing Hillhouse Capital and Singapore’s sovereign wealth fund GIC Pte as partners in the frame. “Tencent plans to lead the consortium for the 10% stake in UMG with a goal to carry out the purchase within the next few months,” continued the report, adding that Tencent plans to pay for its share of the investment with a mixture of debt-funding and equity.

One potential reason for bringing on co-investors would be as reassurance to regulators, particularly in the US, over the prospect of a Chinese company buying even a minority stake in one of the three major labels. With several prominent US politicians demanding an investigation into Musical·ly’s acquisition by Bytedance in late 2017, it’s a live question.

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Stuart Dredge

Music Ally's Head of Insight

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