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Music streaming firm Cloud Village sets Hong Kong IPO offer price

By Mensholong Lepcha

08:49, 23 November 2021

Person listening to music using headphones
Person listening to music using headphones – Photo: Shutterstock

Music streaming platform Cloud Village aims to raise up to HKD3.52bn ($451.6m) via its initial public offering (IPO) in Hong Kong.

Cloud Village will offer 16 million shares, representing 7.7% of total number of shares in issue post-IPO, its parent company NetEase said on Tuesday.

The IPO price for Cloud Village shares is expected to be no less than HKD190 per share and no more than HKD220 per share, NetEase said.

NetEase to hold over 60% of Cloud Village

Parent NetEase may acquire up to $200m worth of Cloud Village shares under the IPO at HKD205 per share, the company said.

NetEase will hold about 61.3% of Cloud Village post-IPO.

If the IPO proceeds, Cloud Village will boast a market capitalisation of between HKD39.47bn to HKD45.71bn, NetEase said.

Option to sell extra 2.4 million shares

Cloud Village has the option to sell an extra 2.4 million shares after the company lists in Hong Kong.

Cloud Village’s initial IPO plan was shelved in August amid a sweeping regulatory crackdown by Beijing on China’s private sector.


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Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
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Last week, NetEase announced that Cloud Village had restarted its IPO application with the Stock Exchange of Hong Kong (HKEX).

Loss-making company

NetEase in a stock exchange filing said it expects Cloud Village’s net loss for 2021 to “record a substantial increase” compared with a year ago.

The parent company added that it expects Cloud Village to remain loss-making till the end of 2023.

“It (Cloud Village) has been focused on growing its user base via investing in its brand and high-quality content, rather than seeking immediate financial returns or profitability, in order to lay a solid foundation for long-term development,” NetEase said.

HKEX approval awaited

Cloud Village intends to use its IPO funds for expansion of its music content library, for investments in artificial intelligence, machine learning and data analysis-related research and development initiatives, for mergers and acquisitions and general corporate purposes.

The music streaming servcie has flagged intense competition in the music streaming industry, dependence on third-party licences, regulatory risks and deterioration in Sino-US relationship as potential risks to the company, among others.

Investors now await the HKEX to green light the IPO.

Read more: Music streaming firm Cloud Village restarts Hong Kong IPO

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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