Chinese tech giant ByteDance plans to list its domestic operations in Hong Kong or Shanghai, people familiar with the matter told Reuters, amid rising tensions between China and the United States over its successful non-hit video app. Chinese TikTok.
Of the two locations, the company prefers Hong Kong, according to two people. One of the two also said that ByteDance is simultaneously exploring the option of listing its smaller non-Chinese companies – which includes TikTok which is not available in China – in Europe or the United States.
The eight-year-old Beijing-based tech and media company originally wanted to register as a combined entity, including TikTok and other operations, in New York or Hong Kong as part of a successful deal. TikTok allows smartphone users to shoot and download short videos with special effects in seconds.
But ByteDance has been in talks with the stock operator Hong Kong Exchanges and Clearing (HKEX) over the list of Chinese companies, one of the people said. The company was also in discussions with Chinese securities regulators, according to the other two people.
Reuters previously reported that China accounted for the bulk of ByteDance’s revenue, which a source said was around $ 16 billion in 2019.
A stand-alone listing could value activity in China at more than $ 100 billion in Hong Kong or the Nasdaq-style STAR market in Shanghai, two sources say.
The review of separate plans for business in China comes against a backdrop of growing concerns over U.S. regulatory oversight and uncertainty over whether a 2013 audit agreement between Beijing and Washington, which underpins the listing of Chinese companies in the United States, will remain intact.
People interviewed by Reuters said the idea of dividing the entire company into two public lists and discussions on the venue were preliminary and subject to change. They spoke on condition of anonymity because the information was private.
The plans can also be complicated by some ByteDance heavyweight investors looking to take over TikTok for a $ 50 billion valuation. TikTok is facing pressure from US regulators who have spoken of banning the app, or requiring ByteDance to sell it, amid suspicions that Beijing could force its owner to pass data on US users.
ByteDance declined to comment. HKEX said it does not comment on individual companies. The China Securities Regulatory Commission did not respond to a request for comment.
BYTEDANCE VALUED UP TO BLN $ 140
Discussions on the two lists were initiated before investor plans for a separate takeover of TikTok emerged, according to a source, but after the Committee on Foreign Investment in the United States (CFIUS) began to meet. look at TikTok’s handling of user data last year. .
The plans for both lists also may not directly influence how the future of TikTok plays out, this person said.
ByteDance was valued at nearly $ 140 billion earlier this year when one of its shareholders, Cheetah Mobile, sold a small stake in a private deal, Reuters reported.
It generated around $ 2.9 billion in profits for 2019, according to one of those familiar with the matter. The company has set a 2020 revenue target of around 200 billion yuan ($ 28.62 billion). TikTok, over the same period, is expected to reach sales of $ 1 billion.
The bulk of revenue comes from advertising on apps for 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 the Lark work collaboration tool and the Resso music streaming app.
In March, ByteDance founder Zhang Yiming announced a more independent staff structure for the China operations, appointing a dedicated president and CEO for the China operations, while himself retaining the role of director. global general.
The idea of a business listing in China comes as diplomatic tensions have increased between Beijing and the capitals of other countries, including the United States, India and Britain.
Chinese companies listed in the US are also facing increased financial control and stricter audit requirements from US regulators, prompting a number of Chinese companies, including the search engine giant Baidu and online travel company Trip.com Group, to consider dropping a listing in New York City and moving to an exchange. closer to home.
The high-tech Shanghai STAR market, seen as part of Beijing’s drive to become self-reliant in core technologies, has become the world‘s second largest market for IPOs so far this year, after Nasdaq, with $ 10.3 billion raised through offers. The Hong Kong stock exchange ranked third with $ 8.9 billion raised, according to data from Refinitiv.