Latham Advises Tencent Music Entertainment Group

American multinational law firm Latham & Watkins advised Tencent Music Entertainment Group on its minority equity investment in Wave VR.

Virtual reality is a technology that simulates vision to end up with a 3D environment in which a user appears to be immersed while browsing through it or experiencing it.

Founded in 1934 in Los Angeles, California, Latham is the second-largest law firm in the world by revenue. As of 2021, Latham is also one of the most profitable law firms in the world, with profits per partner exceeding $4.5 million.

The deal will enable Tencent to air Wave experiences in China across all of its platforms including QQ Music, Kugou Music, Kuwo Music, and WeSing.

Tencent is a company that develops music streaming services for the Chinese market. Tencent Music’s apps include QQ Music, Kugou, Kuwo, and WeSing; which have more than 800 million active users and 120 million paying subscribers.

Additionally, this collaboration will allow the two companies to develop virtual concert content for TME Live, an innovative live performance brand under TME, which pioneers the integration of offline concerts with an online experience.

The Latham deal team was led by Hong Kong corporate partner Frank Sun, with Beijing associate Jason Zhao. Advice on CFIUS matters was provided by D.C. partner Steven Croley, counsel Rachel Alpert, and associate Tahura Lodhi; and on IP matters by Hong Kong associate Kieran Donovan.

Wave brings people together through virtual entertainment. Their shows enable artists and audiences to collaborate in the creation of the most interactive live performance experiences in the world.

Wave combines the best of live music, gaming and broadcast technology to transform the live music experience. All shows are live streamed globally across their popular social and gaming platforms including YouTube, Twitter, Twitch, TikTok, Facebook and Roblox.

Advisory Excellence in Asia

Asia is Earth’s largest and most populous continent, located primarily in the Eastern and Northern Hemispheres. It shares the continental landmass of Eurasia with the continent of Europe, and the continental landmass of Afro-Eurasia with Africa and Europe.

In an increasingly knowledgeable client market providing sophisticated, high-quality advice allows providers of wealth management services to differentiate themselves.

Typically, most private banks aim to achieve “excellence” using a structured advisory process: assessing a client over a number of elements, including risk profile, and developing a customised solution.

In Asia, however, client advisers rarely follow this process for two reasons: it is a young industry and the current incentive structures for the front-line staff.

Although the last financial crisis was an exceptional situation, it has brought into focus the need for a comprehensive client analysis as a cornerstone of high-quality advice.

In order to deliver suitable services a constant learning process is required, driven by both providers of financial services and the clients.

High-quality advice in rising demand

The demand for high-quality advice is made more acute as Asian clients are usually highly hands-on in making investment decisions compared to their European counterparts.

They are also generally more willing to take risks and are more receptive to innovative products.

Despite Asian clients continuing to taking their own decisions, the need for advice still increases, especially for the initial risk assessment.

The Asian market has several notable features that differentiate it from more mature ones.

Firstly, the largest proportion of assets generally remain with the first generation, and for private banks that means the demand for wealth planning services will increase.

Secondly, there is generally little distinction between business and personal assets, therefore an adviser who can offer solutions in both areas adds more value to their clients and can obtain a larger share of their assets.

These factors place high demands on client advisers and other wealth management specialists.

Correct, timely decision making

The opportunities for growth in Asia remain enormous.

To take advantage of this, major adaptations to systems, processes, and change management approaches are necessary in order to successfully develop a business in a sustainable manner.

The correct use of expert knowledge will play a central role in the quick development and sustained implementation of solutions in Asia.

Many private banks still work with the “everything for everyone” approach, with no clear differentiation for client segments.

Advisers often have too many clients to be able to really focus. Inadequate processes and a lack of suitable systems compound this.

Furthermore, advisers require continuous support in the provision of advice to their clients, especially for cross-border activities, where the requirements change constantly.

In addition to the necessary and continuous advanced training, advisers must also be able to rely on an efficient infrastructure to assess their client’s needs and to develop robust solutions.

This can be an important factor, especially in Asia, for companies who wish to retain existing and attract new advisers.