TENCENT Holdings Ltd. is planning to increase its stake in Universal Music Group by a further 10 percent before the option expires in January, according to people familiar with the matter.

The Chinese technology company last year led a consortium that purchased 10 percent of the world’s biggest music company from French media company Vivendi SA. That deal valued Universal Music at 30 billion euros (US$35.2 billion) and Tencent and its partners have the option to increase their stake to as much as 20 percent at the same valuation until Jan. 15, 2021.

Tencent is likely to exercise this option, three people said. It could make the move before year-end, one person said.

It isn’t clear whether Tencent will be joined by the original consortium members, the identities of which haven’t been made public, the people said. Hillhouse Capital and Singapore sovereign wealth fund GIC Pte were among potential investors that Tencent approached.

Deliberations are ongoing, and Tencent could still opt not to increase its stake in Universal Music, one of the people said. Representatives for Tencent and Vivendi declined to comment.

By increasing its stake, Tencent would seek to diversify from gaming and China, where it has been busy with deals this year. It’s helped orchestrate the combination of Huya Inc. and DouYu International Holdings Ltd., creating a Chinese game-streaming giant with a market value of more than US$11 billion. It has also proposed to take private Chinese gaming firm Leyou Technologies Holdings Ltd.

Universal Music has been boosted by a surge in streaming that has dragged the industry out of a decade-long slump. The music business has helped Vivendi hold up through the pandemic lockdown, limiting the blow from a drop in advertising and publishing revenue.

A deal by Tencent will counter a recent venture by rival NetEase Inc., which in August struck a deal to license songs from Universal Music for the first time. China’s antitrust authorities had investigated Tencent’s dealings with the world’s three biggest record labels but the probe was suspended this year, people familiar with the matter said in February.

An initial public offering of Universal Music is planned by early 2023, according to a Vivendi statement in February. Tencent also plans to take a minority stake in Universal Music’s Chinese subsidiary. (SD-Agencies)