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Tencent Turns to Singapore’s State Investor GIC to Rescue Deal with UGM

Tencent Holdings has moved to Singapore’s state investor GIC and other sovereign funds to help rescue a contract to buy a stake in Vivendi’s Universal Music after significant buyout funds quit the discussions desk, sources stated.

Vivendi, controlled by billionaire Vincent Bollore, had earlier revealed discussions with Tencent in August to sell a part of Universal Music Group (UMG), the music brand of artists such as the Beatles, Lady Gaga, Tylor Swift, Drake, and Kendrick Lamar.

Bollore is seeking to make money on the rising public demand for subscription and ad-based music streaming platforms, which have increased UMG’s income over the last four years.

The contract would further mark one of the greatest investments by a Chinese firm into a major European media enterprise at a time when Chinese companies have slowed down deal-making in the West.

However, for the previous six months, Tencent has struggled to find the money to seal the transaction, raising considerations that talks with Vivendi could fall by, the sources stated, requesting anonymity as negotiations are not yet public.

Private equity funds KKR and Hellman & Friedman quit negotiations last month, the sources mentioned, persuading Singapore’s GIC to tap a series of sovereign wealth funds to save the contract.

Beneath the latest plan – still being discussed with Vivendi – the Chinese tech giant would take a 20%-30% stake in the music brand through a consortium of state investors that might stump up the cash, two sources stated.

Negotiations between Tencent and sovereign wealth investors have gained traction in recent weeks, and the parties are working flat out to seal the contract by the end of the year, the sources stated.

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Jerry Bennett

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