Description
bytedance ltd. was valued at around $220 billion in a recent private market investment by Abu Dhabi-based artificial intelligence firm G42, a significant discount from the $300 billion the TikTok owner pegged during a recent share buyback program. G42, controlled by the UAE's royal sheikh Sheikh Tahnoon bin Zayed Al Nahyan, has bought a stake of more than $100 million from existing investors in recent months through his 42XFund, people familiar with the matter have said. of the agreement. Another fund bought ByteDance for $225 billion soon after, said one of the people, who asked not to be named and described non-public information. ALSO READ: UK investigating TikTok, 'wants to make sure phones aren't spyware', security chief says
The Chinese internet company's revolving price reflects uncertainty that has arisen since Washington signaled it might be open to banning the viral video phenomenon TikTok, which lawmakers have accused of posing a threat to national security. TikTok's management is discussing the possibility of separating from its Chinese parent to help address those concerns, though that's a last resort.
ByteDance's valuation in the G42 transaction does not yet reflect the potential consequences of the Silicon Valley Bank implosion, which stunned startups from the US to China and raised concerns about broader systemic risks. It's a long way from a high of around $460 billion in 2021 when Tiger Global Management bought shares.
Sheikh Tahnoon, known as the UAE's spymaster, has built a portfolio through G42 in everything from cloud computing to vaccines to self-driving cars. Last year, his AI company created the $10 billion 42XFund, which has additional backers, to invest in technology companies in emerging markets. It recently hired Jason Hu, former chief investment officer of Chinese company JD.com Inc., to expand its presence in Asia.
The Middle Eastern company may be betting on ByteDance's long-term potential as the recovery of the Chinese economy bolsters tech giants emerging from three years of Covid restrictions and endless regulatory crackdowns.
The growing enthusiasm for AI since ChatGPT's sensational public launch could also benefit ByteDance, which pioneered algorithms a decade ago to hook users to video and news. Representatives for 42XFund declined to comment. A ByteDance spokesperson did not immediately respond to a request for comment.
Longer term, some investors believe that parts of China's struggling tech sector could finally find its way back to growth, despite lingering suspicions about Beijing's intentions vis-à-vis the private sector. Since last year, Xi Jinping's government has repeatedly assured investors and businessmen of its pro-business stance.
ByteDance, which gained a foothold in the United States by buying TikTok's predecessor, is one of the few Chinese app developers to have found success abroad. This select club includes upstarts such as fast-fashion provider Shein Group, AliExpress and PDD Holdings Inc.'s Temu sales app.
ByteDance's flagship service has attracted advertisers keen to reach a younger demographic. And he searched for a niche by selling products to millions of social media users through live broadcasts around the world.
This popularity has scared some in Washington. The White House last week approved a bipartisan bill that could give the president the power to ban or force the sale of TikTok, potentially dealing a blow to the Chinese company's international ambitions.
An IPO for ByteDance (the company has explored options, notably in Hong Kong and the United States) is still far from complete, given the volatility of the global market. In September last year, the Beijing-based company offered to buy back $3 billion of its own shares at a valuation of around $300 billion, offering existing backers such as Susquehanna International Group and Sequoia Capital to cash in a portion of their Profits.
ByteDance, which is also backed by SoftBank Group Corp. and Temasek Holdings Pte, isn't in dire need of cash after TikTok only brought in about $12 billion in revenue in 2022.
