Tencent Holdings Ltd. is in discussions to buy a stake in Warner Music Group as part of the record company’s initial public offering, a key test for a new-issue market that has been hobbled by the coronavirus pandemic.
The Chinese internet giant is discussing an investment of $200 million ahead of an IPO that is slated for next week, according to people familiar with the matter.
Warner Music is also working to line up institutions that, along with Tencent, would serve as anchor investors contributing a total of more than $1 billion toward a fundraising goal of as much as $1.8 billion, the people said. The offering is expected to value Warner Music at $11.7 billion to $13.3 billion and is set to begin trading June 3.
That would make it the biggest IPO of 2020, according to data from Dealogic. It will also serve as an indication to other companies seeking to go public of whether it is safe to do so after the pandemic brought IPOs to a virtual standstill.