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Xiaohongshu’s biggest shareholders are in talks to sell shares in the Chinese Instagram-like service at a valuation of at least US$20 billion (HK$156 billion), drawing interest from Tencent (0700) and other big names as a potential TikTok US ban approaches.
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Backers GGV Capital, GSR Ventures and Tiantu Capital are negotiating to sell part of their holdings in China’s closest parallel to Instagram, according to people familiar with the matter. Funds that showed interest included existing stakeholders HongShan Capital Group (formerly Sequoia China Capital) and Hillhouse Investment, the people said, requesting not to be named because the matter is private. Tencent is also considering whether to buy more shares, one person added.
A successful deal will propel Xiaohongshu’s valuation back to levels last seen during its peak in 2021, just as the social media firm welcomes a flood of American users fleeing TikTok. That would be a boost for an initial public offering that the industry expects to happen as soon as this year, depending on market conditions.
Still, the transaction has yet to close because a raft of existing shareholders have a right of first refusal and priority to buy shares in any sale, the people said. Negotiations may still fall through if potential buyers decide to hold off for now, particularly as the Tiktok situation remains fluid. Xiaohongshu — considered one of several viable alternatives to TikTok — became the most downloaded free app on iOS for the first time this week.
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