Tencent Music, being spun off from Chinese e-commerce giant Tencent, may raise less fresh capital than previously expected. Possibly only $2 billion, instead of an indicated $4 billion, according to a report.

The unit is in advanced preparations for an IPO in the U.S. But, according to a report by Reuters and its IFR publication, it is slicing the amount of new finance being raised.

It is not clear, however, whether that reflects a smaller number of new shares being sold, or whether the valuation of the company has been slashed. Tencent has so far not responded to Variety's requests for comment.

Over the past months, it had appeared that the company was seeking a valuation of $25 billion. Chinese media have speculated that the valuation could be as high as $30 billion. The new capital component would have exceeded the $2.42 billion raised by Chinese streaming firm iQIYI earlier this year.

Tencent announced the spin-off in early July. According to Reuters, it filed a confidential updated prospectus with the U.S. Securities and Exchange Commission on Sept 7.

Following a share swap late last year, Spotify owns 9% of Tencent Music, and Tencent owns 7.5% of Spotify.

Tencent Music counts over 700 million monthly users, of which some 15 million may be paying subscribers. It operates a variety of apps allowing users to stream music, watch live performances and play karaoke, as well as a close connection to Tencent's WeChat messaging platform, which has over 1 billion users.

In its current form, Tencent Music was established in 2016 after a merger with streaming rival China Music. Since then it has cemented its leadership position by adding to and renewing deals with international studio groups Universal Music, Warner Music and Sony Music. It also has deals with China's Huayi Brothers Music and Korea's YG Entertainment.