Investors Join Talks With Tencent To Acquire Universal Music Group

Tencent Holdings Ltd. is in talks with potential co-investors for its proposed bid for a minority stake in Universal Music Group from Vivendi SA, according to Bloomberg citing people with knowledge of the matter.

Hillhouse Capital and Singapore’s sovereign wealth fund GIC Pte. are among potential investors that the Chinese tech giant has approached, the people said, asking not to be identified because the matter is private. 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, the people said.

The Chinese tech giant is weighing to raise about $1.1 billion in debt to help fund the deal, while the rest will likely be funded in equity, the people said.

Vivendi said in August that it’s in talks to sell 10% of UMG to Tencent in a deal that values the world’s biggest music company at 30 billion euros. The Chinese tech firm has a one-year call option to acquire an additional 10% at the same price and terms. Vivendi also plans to sell an additional minority stake in UMG to other potential partners.

Enlisting minority investors would help Tencent share the costs and risks of buying as much as 20% of UMG, the people said. No final decision has been made as talks are still ongoing and could fall apart, the people said.

Tencent could bring Universal Music closer to consumers in Asian markets that are relatively underserved by the world’s major music labels. The Chinese company could help promote Universal’s stable of artists, which include Drake, Taylor Swift and U2, and identify talent in new markets.