ByteDance To Raise $2B At $180B Valuation Prior To Planned HK IPO

ByteDance Ltd. is in discussions to raise US$2 billion before listing some of its businesses in Hong Kong, according to media reports.

The Chinese company is in talks with a group of investors including Sequoia Capital over funding that would boost its valuation to US$180 billion. Previously, ByteDance shares have been trading in private markets at around US$170 billion valuation, according to investors familiar with the company.

After the private capital raising, ByteDance then seeks to list some of its biggest assets for an initial public offering in Hong Kong. These "mature business" may include Douyin (the Chinese version of TikTok), Toutiao, and Watermelon Video. The reason is that packaging these mature businesses on the market is conducive to the market giving it a higher valuation.

Some of the newer businesses including Dali Education, TiKTok, Volcano Engine are not in the ByteDance’s listing plan. ByteDance is fighting a Trump administration ban on TikTok in the U.S. after the video service was labeled a national security threat. ByteDance has struck a deal to sell a stake in TikTok to Oracle Corp. and Walmart Inc. but that deal is still in the process to be completed.

ByteDance promotes Douyin’s listing in Hong Kong. Both in terms of listing location and business scale, it is considered to be a battle for IPO with its biggest competitor, Kuaishou. Kuaishou plans to list in Hong Kong in the first quarter of 2021. 9 There have been many news of the listing progress since the beginning of the month. On November 1st not long ago, it was reported that Kuaishou would submit an application for listing in Hong Kong as early as this week.

ByteDance’s planned listing in Hong Kong may be partially due to competition with its biggest competitor, Kuaishou. Kuaishou plans to list in Hong Kong in the first quarter of 2021. There have been rumors of the listing progress since the beginning of the month and it was reported that Kuaishou would submit an application for listing in Hong Kong as early as this week.

Douyin has been eroading Kuaishou’s market share swiftly. In September 2020, Beijing ByteDance CEO Zhang Nan announced the latest daily active data of Douyin: As of August 2020, including Douyin Volcano version, Douyin daily active users have exceeded 600 million. If adding Toutiao and Watermelon Video, these mature businesses that have been developed for four to eight years have a total daily active user scale of about 800 million.

According to a report on November 5, as of the end of June 2020, Kuaishou DAU has fallen by about 50 million after reaching a peak of 320 million during the Spring Festival last year. This data has not been officially confirmed by Kuaishou.

As to TikTok’s ban in the US, ByteDance has sued the U.S. government to prevent such ban. In October, a federal judge in Pennsylvania blocked a broad set of government restrictions designed to curb the use of TikTok in the U.S.

 
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