[HONG KONG] [A Chinese investment firm bought a block of ByteDance shares at a valuation of US$480 billion, far above recent levels, a sign of strong investor interest in the parent company of video sensation TikTok.
In bidding that took place on Wednesday (Nov 19), venture firm Capital Today won out over several other interested parties to acquire equity from Bank of China Group Investment, an early institutional investor in ByteDance, according to people familiar with the matter, who asked not to be named discussing private information.
The slug of stock had been priced at roughly US$200 million with a US$360 billion valuation for ByteDance, the people said.
Yet the price escalated rapidly with as many as seven bidders participating in the auction, the people said. Capital Today, led by prominent investor Kathy Xu, paid roughly US$300 million for the stake at the valuation of almost a half trillion US dollars, said the people.
The transaction is a sign of the enduring interest in the Beijing company founded in 2012 by Zhang Yiming that’s created several of China’s most popular digital services. TikTok has garnered about 170 million users in the US, but the Trump administration is negotiating a deal to shift majority ownership to American investors.
Capital Today, ByteDance and Bank of China representatives did not respond to emails seeking comment.
The forced sale of TikTok US had long loomed over ByteDance as a potentially enormous loss, but the current deal under discussion would avoid the most damaging outcome. ByteDance will likely get about half of the profit from the platform’s US operation even after it sells a majority stake to American investors, Bloomberg News reported in September.
President Donald Trump has suggested the TikTok deal was essentially complete, as part of broader trade negotiations between the US and China. But Beijing has yet to publicly indicate that it would give final approval.
The Capital Today valuation is a sharp increase from recent transactions. ByteDance kicked off a share buyback programme for employees in September at a valuation of about US$330 billion, the people said. The company has since been planning its annual buyback programme for institutional shareholders this month, the people added.
Several investors, including SoftBank Group and Fidelity Investments, had marked up their holdings in ByteDance to valuations of more than US$400 billion, Bloomberg reported earlier this year.
The world’s most valuable startup is OpenAI with a valuation of US$500 billion, according to CB Insights. Elon Musk’s SpaceX comes in second, at about US$400 billion.
Such aggressive bidding in the auction was likely because the bank’s stock sale was a rare opportunity to acquire a substantial batch of existing ByteDance shares, one of the people said. Investors are seeking exposure to its rapidly developing artificial-intelligence capabilities, as well as its global content and advertising businesses.
This transaction is one of the largest secondary trades involving ByteDance this year, the people said.
Xu founded Capital Today and is among the most prominent venture capitalists in China. She’s backed several of the country’s tech heavyweights, including food delivery giant Meituan and e-commerce player JD.com. BLOOMBERG
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