HK IPO dancing to US$400b tune

Top News | Bloomberg, Reuters and Avery Chen 15 Apr 2021

TikTok owner ByteDance has begun a Hong Kong initial public offering bid, state-owned media reported yesterday, which may turn its 38-year-old founder into one of the richest men in the world.

ByteDance has told the Hong Kong Stock Exchange that it has appointed securities underwriters for its public sale, China Securities Journal reported yesterday, but it removed the article from its official website last night.

Some private equity funds valued the firm at US$400 billion (HK$3.12 trillion) - 1.8 times that of rival Kuaishou Technology, local media reported earlier this month.

The Beijing-based firm, famous for its short-video apps and news aggregator Toutiao, last month hired former Xiaomi executive Chew Shou Zi for a new chief financial officer role, seen as a sign an IPO could be nearer.

At the end of March, Reuters reported that ByteDance is in talks about a possible offshore listing of its short video app Douyin, the Chinese version of TikTok, in New York or Hong Kong.

Shares of the company trade in the private market at a valuation of more than US$250 billion, Bloomberg reported. At that level, founder Zhang Yiming, who owns about a quarter of ByteDance, could be worth more than US$60 billion, placing him alongside Tencent's Pony Ma Huateng and bottled-water king Zhong Shanshan, according to the Bloomberg Billionaires Index.

With TikTok facing scrutiny in the United States and India, Zhang has put more effort into ByteDance's fast-growing Chinese businesses, which range from gaming to education to e-commerce. That helped it more than double revenue to US$35 billion last year.

ByteDance yesterday said that its gaming unit Nuverse has acquired C4games, putting it in direct competition with Tencent.

During its last fund-raising round, ByteDance reached a US$180 billion valuation, a person with knowledge of the matter said. That's up from US$20 billion about three years ago, said CB Insights.

It's a tough time to be wealthy in China as the government seeks to rein in the country's most powerful corporations and their billionaire founders. Just ask Jack Ma Yun: After opening an antitrust probe, regulators fined Alibaba a record 18.2 billion yuan (HK$21.64 billion) and the central bank ordered an overhaul of his Ant Group fintech empire so it would be supervised more like a bank.

On Tuesday, China ordered 34 internet companies, including ByteDance, to rectify their anti-competitive practices in the coming month.

While ByteDance ha snot been singled out as a target, its dominance in social media and war chest for deal-making are sensitive areas the government is looking into. "There are no more silly games in the US with Trump and potential bans or forced asset sales," said Kirk Boodry, founder of investment research firm Redex Holdings.

"But the pressure on tech-share prices and China in particular might make US$250 billion a tough sell," he added, referring to ByteDance's value in private transactions.

Born in the southern city of Longyan, Zhang is the only son of civil servants, He studied programming at Tianjin's Nankai University, where he built a following on the school's online forum by fixing classmates' computers.

He joined Microsoft Corp for a brief stint after graduating, later calling the job so boring he often "worked half of the day and read books in the other half," according to an interview with Chinese media. He went on to develop several ventures, including a real-estate search portal.

His breakthrough came in 2012, when working in a four-bedroom apartment in Beijing he created ByteDance's first hit - a joke-sharing app later shut down by censors. It then turned to news before winning over more than a billion global users with its short-video platforms TikTok and Chinese twin app Douyin.

In the process, it attracted big-name investors such as SoftBank Group, Sequoia Capital and proprietary-trading firm Susquehanna International Group, making it a rarity among Chinese internet startups that usually get absorbed into the wider ecosystems of Tencent and Alibaba Group.

"Zhang is someone who's known for thinking long-term and not easily dissuaded by short-term setbacks," said Ma Rui, partner at venture-capital firm Synaptic Ventures.

"He is set on building an enduring, global business."

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