Tencent Music’s IPO — the most recent talk of the town and the street in tech community — continues to ride on the whirlwind year that it has been for the company. Things haven’t really been a smooth sail for Tencent’s music streaming service in its build up to the US IPO, and they are about to get a bit more rough.
Chinese investor Hanwei Guo has accused Tencent Music Entertainment Group’s co-president of using misinformation, threats and intimidation to force him for selling his stakes in Ocean Music. The company eventually became a part of the TME in a merger in 2016 and hence the lawsuit.
Guo has filed a motion for discovery in the US, detailing the entire episode. He mentions that he had invested close to $26 Million in Ocean Music at the “urging of its founder Guomin Xie”. Xie continued to handle the operations and entire management of Ocean music before the company announced an acquisition by Tencent Music, an event Guo was ill-informed of. The motion seeks information from Deutsche Bank AG, JPMorgan Chase & Co., Bank of America Corp. and other underwriters for TME’s IPO that Guo plans to use in an arbitration underway in China.
The motion filed, states that in 2018, Guo was approached by Xie’s conspirator Li, who presented documentary proofof the conspiracy to defraud and threaten Guo into selling his equity in Ocean Music. Guo then investigated and obtained documents that corroborated Li’s account, including documents that demonstrated that Xie had misrepresented the status of Ocean Music at the time he coerced Guo into selling his shares.
As for TME, they can not publicly comment since the company is in a quiet period where federal rules limit the company from what it can say publicly, before the planned IPO.
A Bloomberg report had recently states that TME’s proposed IPO is scheduled to take orders starting December 12. It’ll be a wait and watch game to see how this arbitration affects the proceedings, as well as investor sentiments, since the IPO has already been a delayed one. More on this from our side soon.