Vivendi has closed the sale of 10% of its subsidiary Universal Music Group to a consortium led by the Chinese tech giant Tencent. The deal, which was announced in December, values UMG at €30 billion ($33 billion).

As part of the agreement, the consortium – which includes Tencent Music Entertainment, as well as other financial co-investors — has the option to buy another stake of up to 10% at the same price by January 15, 2021.

“Vivendi is very happy with the arrival of the Tencent-led consortium. It will enable UMG to further develop in the Asian market,” said the French media conglomerate.

The company, which also owns Canal Plus Group, said it will now seek to sell additional minority interests in UMG with the help of several banks which it has already mandated.

As previously reported, UMG is planning an IPO by early 2023. Vivendi said it “intends on using the proceeds from these deals for substantial share buyback operations and acquisitions.”

When Vivendi first announced plans to sell up to 50% of UMG in 2018, it took many industry players and investors by surprise. UMG is Vivendi’s crown jewel and has underpinned its financial results for several years. Headed by chairman and CEO Lucian Grainge since 2011, UMG is by far the world’s largest music company.

Vivendi saw its annual revenues jump by 14% to €15.8 billion ($17 billion) in 2019, driven by UMG whose revenues reached more than $7.7 billion, up 14% thanks to a 21.5% surge in streaming revenue. UMG’s recorded music best sellers for 2019 included new releases from Billie Eilish, Post Malone, Taylor Swift and Ariana Grande.

Tencent Music Entertainment, a separately-listed subsidiary of Tencent, has an option to acquire a minority stake in UMG’s Greater China business, within two years of Tuesday’s deal completion.

Tencent Music Entertainment is China’s leading online music distributor and claims more than 600 million monthly users for its QQ Music, Kugou Music, Kuwo Music and WeSing apps. It recently reported 2019 revenues of $3.65 billion and net profit of $572 million.

Under pressure from competitors, Tencent Music Entertainment sees the UMG deal as part of its strategy to hold on to its Chinese market leadership position. “Through deepening the strategic partnership with UMG, TME expects to realize in-depth cooperation by leveraging UMG’s vast upstream content combined with the company’s profound user insights, increasing promotional capabilities, and its interactive and vibrant fan-based music centric ecosystem to further solidify the company’s content leadership and capture the tremendous growth opportunity driven by continued digitalization of China’s music industry,” Tencent Music Entertainment said in a statement.

Patrick Frater in Hong Kong also contributed to this report.