A major lawsuit has emerged just days before Tencent Music's IPO, with investor Hanwei Guo claiming he was defrauded of his early investment in the company when it was known as Ocean Music.

According to Guo's filing in the US District Court (Southern District of New York), he originally owned 80% of Ocean Music through an investment worth "tens of millions of dollars." He alleges that Guomin Xie, Tencent Music Entertainment's Co-President, and others used threats and misinformation to force him to surrender control of the company. Guo claims he was subsequently denied shares during the IPO preparation.

Tencent Music has responded by pledging to "vigorously" contest these allegations. However, the company acknowledged in a statement that the lawsuit could have "a material adverse effect on our reputation, capital structure, business, and financial conditions." They noted that the legal process in China will require significant resources and management attention.

This case bears similarities to Spotify's experience before its direct listing, where they faced unsubstantiated claims from Tanweer Khan, who attempted to challenge the company's ethics and leadership structure.

The company has warned shareholders that additional legal actions related to this arbitration may emerge, potentially affecting their operations and management focus.

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