Tencent Music Rises in H.K. After Debut Without Fresh Funds

(Bloomberg) -- Tencent Music Entertainment Group traded higher in Hong Kong’s exchange on Wednesday after a listing that didn’t involve selling new shares or raising funds.

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The stock closed at HK$18.22 on Wednesday, having started at HK$18. Two class A shares in Hong Kong are equivalent to one American depository receipt in New York. The ADRs closed at $4.58 (HK$35.95) on Tuesday.

The Shenzhen-based company chose to debut in the Asian financial hub by way of introduction, a quicker and easier route for firms already listed elsewhere. The firm controlled by tech giant Tencent Holdings Ltd. is part of a growing group of Chinese firms choosing the method to list closer to home as escalating Sino-US tensions fuel delisting risks stateside.

According to terms of the listing, holders of ADRs will have the option to cancel their ADRs and receive equivalent class A shares in Hong Kong.

Volatile equity markets, high inflation and surging interest rates capped valuations worldwide for companies seeking to go public this year through traditional initial public offerings. As a consequence, there’s been a slump in proceeds raised in venues including New York, London and Hong Kong.

Tencent Music Is Latest Cashless Debut Coming to Asia: ECM Watch

Electric-vehicles producer Nio Inc. debuted in Hong Kong in March using the same process, and later began trading in Singapore via the method. US-listed platform for housing transactions and services KE Holdings Inc. and software-as-a-service firm OneConnect Financial Technology Co. took the same path earlier this year.

Tencent Music raised some $1.07 billion through a new share sale in New York four years ago, with the shares now trading about two-thirds below their listing price.

(Updates with closing price in second paragraph.)

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