Tencent's music division is set to go public with actual profits on the board and industry competitor Spotify as a backer, according to a newly filed prospectus.

The music arm of Chinese tech giant Tencent plans to raise as much as $1 billion, in what could be one of the largest U.S. IPOs by a Chinese company since Alibaba raised over $20 billion in 2014.

Tencent Music owns the four largest music apps in China — streaming apps QQ Music, Kugou Music and Kuwo Music, and karaoke app WeSing. The company counted more than 800 million unique monthly active users during the second quarter of 2018, according to the filing.

For the first six months of 2018, Tencent Music reported a profit of $263 million (or $320 million adjusted, excluding stock-based compensation and other items) on revenue of $1.3 billion. For the entire year of 2017, it posted $199 million in profit ($288 million adjusted) on revenue of $1.7 billion.

The company has posted an annual profit for the last two years, according to the filing.

Parent company Tencent owns 58 percent of the music division. Spotify, which went public on U.S. exchanges earlier this year, owns 9 percent of shares.

Tencent Music filed to list its shares on U.S. exchanges the symbol "TME." Morgan Stanley and Bank of America are among the lead underwriters of the offering.

—Reuters contributed to this report.