(Bloomberg) -- Tencent Holdings Ltd., China's largest social media company, acquired a 10.4% stake in the Class A shares of Warner Music Group Corp., a bet on the industry's long-term growth prospects following the U.S. music label's $1.9 billion initial public offering last week.
Tencent purchased 8 million Class A Warner Music shares, according to a regulatory filing Friday. The U.S. music group is controlled by billionaire Len Blavatnik through his ownership of Class B stock with supervoting rights. Including all of the classes of stock, the company holds a 1.6% stake.
At current prices, Tencent's investment is worth more than $246 million. That represents a quick gain from the initial price of $25 a share that Warner Music fetched last week in its IPO. The company is the only separately traded major U.S. label. The largest, Universal Music Group, is owned by Vivendi SA, followed by Sony Corp.'s Sony Music Entertainment.
The industry is enjoying a long-running financial renaissance thanks to the popularity of streaming services like Spotify Technology SA and Apple Inc.'s Apple Music. Warner Music's sales grew 12% last year.
Shares of Warner Music rose 2.6% to $30.77 in New York. They have gained 23% from the offering price.
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