TikTok owner ByteDance considers listing China business in Hong Kong or Shanghai

31 Jul, 2020 20:46
source: Singularity Financial

Singularity Financial Hong Kong July 31, 2020 – ByteDance, the parent company of short video app TikTok, is considering listing its domestic business in Hong Kong or Shanghai rather than floating the entity as a whole outside the mainland amid rising tension between China and the U.S., Reuters reported. The tech giant was valued at $140 billion earlier this year.

ByteDance has been in talks with bourse operator Hong Kong Exchanges and Clearing (HKEX) over the China business listing, one of the people said. The company was also discussing it with Chinese securities regulators. Of the two venues, the company prefers Hong Kong, according to two of the people.

One of the two also said ByteDance is simultaneously studying the option to list its smaller, non-China business – which includes TikTok that is not available in China – in Europe or the United States.

The eight-year-old Beijing-based tech and media company had originally wanted to list as a combined entity, including TikTok and other operations, in New York or Hong Kong in a blockbuster deal. TikTok allows smartphone users to film and upload short videos with special effects within seconds.

The people interviewed by Reuters said the idea of splitting the whole business into two public listings and the venue discussions are preliminary and subject to change. They spoke on condition of anonymity because the information was private.

Plans may also be complicated by some heavyweight ByteDance investors looking to take over TikTok at a valuation of $50 billion. TikTok faces pressure from U.S. regulators who have spoken about banning the app, or requiring ByteDance to sell it, over suspicions Beijing could force its owner to turn over data on U.S. users.

The discussions about the two listings were initiated before the investor plans for a separate TikTok buyout emerged, according to one source, but after the Committee on Foreign Investment in the United States (CFIUS) started to look into on TikTok’s handling over user data last year.

The plans for the two listings may also not directly influence how TikTok’s future will unfold, that person said.

ByteDance generated around $2.9 billion in profit for 2019, according to one of the people familiar with the matter. The company has set a 2020 revenue target of about 200 billion yuan ($28.62 billion). TikTok, over the same period, is expected to hit revenue of $1 billion.

The bulk of revenue comes from advertising on apps under its Chinese operations including Douyin – a Chinese version of TikTok – and news aggregator app Jinri Toutiao, as well as video-streaming app Xigua and Pipixia, an app for jokes and humorous videos.

Some of the company’s other overseas apps include work collaboration tool Lark and music streaming app Resso.

In March, ByteDance founder Zhang Yiming announced a more independent personnel structure for the China business, by appointing a dedicated chairman and chief executive for the China business, while retaining the role of global chief executive himself.