© Reuters. FILE PHOTO: The logo of internet technology company Netease is seen at the China Digital Entertainment Expo and Conference, also known as ChinaJoy, in Shanghai, China July 30, 2021. REUTERS / Aly Song / File photo
By Kane Wu and Scott Murdoch
HONG KONG (Reuters) – NetEase (NASDAQ 🙂 Inc has delayed the initial $ 1 billion Hong Kong public offering of its music streaming service Cloud Village due to volatility in trading in major Chinese tech companies, said two people with direct knowledge of the matter.
The individuals could not be named because the information has not yet been made public.
A spokesperson for NetEase said the company did not have an immediate response.
The IPO was approved by the listing committee of the Hong Kong Stock Exchange, according to documents filed with the exchange, and preliminary meetings were held with potential investors last week.
The deal was due to launch this week but was suspended on Monday, the sources said, given the uncertain conditions Chinese tech companies face following a regulatory crackdown ordered by Chinese officials.
Listed shares of NetEase in Hong Kong fell nearly 14% last week after it was reported that the games sector in China could be the next subject to intensified regulatory scrutiny.
The title is up 4.1% on Monday.
NetEase announced in May that it would separate from Cloud Village and retain 62.4% of the streaming business.
Due to its voting structure, NetEase also planned to keep no less than 50% of the voting rights in the next company, according to its regulatory documents in May.
Cloud Village aimed to raise up to $ 1 billion during the Hong Kong IPO, one of the sources said.
Ali Baba (NYSE 🙂 Group Holdings, Baidu Inc (NASDAQ :), General Atlantic and Boyu Capital are investors in Cloud Village, according to the company’s listing documents.
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