(Yicai Global) Nov. 23 -- NetEase Cloud Music Technology, China’s second-largest music streaming platform, plans to raise as much as HKD3.52 billion (USD452 million) from an initial public offering in Hong Kong.

NetEase Cloud Music will issue 16 million common shares globally and has set a price range of HKD190 to HKD220 (USD24.38 to USD28.23) apiece, with an over-allotment option of no more than 15 percent, the Hangzhou-based firm said today.

It had filed for an IPO in May, but shelved those plans on Aug. 9, a week after getting the green light from the Hong Kong Stock Exchange. The company said it would wait until the market environment improved following a downturn in Chinese tech stocks amid tighter regulation. In July, China’s market regulator had fined main rival Tencent Music Entertainment Group and ordered it to end all exclusive music rights deals with record labels.

The new share offer has three cornerstone investors: NetEase Cloud Music’s parent company and Chinese gaming giant NetEase, Sony Music Entertainment and Orbis Investment Management, who will invest USD200 million, USD100 million and USD50 million, respectively, according to the IPO prospectus. They will collectively subscribe to HKD2.73 billion of shares.

It is the first time for Sony Music to be a cornerstone investor in the Hong Kong IPO of a Chinese digital music company.

Forty percent of the funds raised will be used to continue innovation and improve technical capabilities, NetEase Cloud Music said. Another 40 percent will be used to develop the music community, with the rest set aside for acquisitions, strategic investments, daily operations and general purposes.

NetEase Cloud Music’s valuation is expected to be HKD39.47 billion to HKD45.71 billion after the listing, based on the pricing range.

The company intends to launch global sales on Nov. 23, announce the final price and placement on Dec. 1, and go public the following day, according to the timetable.

Assuming that the over-allotment option is not exercised, NetEase will own more than 60 percent of NetEase Cloud Music and Alibaba Group Holding will own about 10 percent, according to the prospectus.

NetEase Cloud Music and Sony Music reached a comprehensive copyright cooperation deal in May, following which NetEase Cloud Music will have access to Sony Music’s massive music library for years, and the two parties will cooperate more on music promotion and streaming services.

In the first three quarters, NetEase Cloud Music posted CNY5.1 billion (USD799 million) in revenue, up 52 percent from a year earlier, the prospectus showed. The number of its monthly active users reached 184 million, and paying users totaled 27.52 million, a rise of over 93 percent year on year.

Editor: Peter Thomas