(Yicai Global) Dec. 11 -- Spotify AB, the world's largest music streaming service platform headquartered in Sweden, and China's Internet giant Tencent Holdings Ltd. [HK:0700] have announced their equity investment plan, confirming earlier media reports.

Tencent Music Entertainment Group, the music service provider under Tencent, and Spotify will each purchase a minority stake in the other party by cash, per the investment agreement the parties outed Dec. 8, Tencent Technology reported.

Tencent will also acquire a portion of Spotify's shares.

Both firms are likely to float initial public offerings next year and hope to close the deal ahead of their IPOs.

The duo is optimistic about the global music streaming market, said Daniel Ek, Spotify founder and chief executive officer, adding the partnership will create huge opportunities for users, artists, music and business partners, and will benefit both companies via growth of the global music streaming market.

Formed in 2008, Spotify now has 140 million users worldwide, more than 60 million paying subscribers. Tencent Music has 700 million monthly active users, mainly in China, but the ratio of those paying is only 2 to 3 percent, analysts note.

Tencent Music made a takeover offer to Spotify, which it spurned, Tech Crunch reported in September. Tencent Music had a valuation last year of about USD6 billion which it aims to raise to above USD10 billion ahead of its IPO.