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HomeWorldTikTok owner ByteDance plans major global expansion and then go public

TikTok owner ByteDance plans major global expansion and then go public

ByteDance, the world’s most valuable start-up, is unlikely to rush into an IPO in the middle of a bitter trade war and rising scrutiny from Washington.

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Hong Kong: TikTok owner ByteDance Inc. is focused on hiring staff to beef up its international operations before considering an initial public offering in the U.S. or Hong Kong over the longer term, according to people familiar with the matter.

The world’s most valuable startup is still only at the very early stages of exploring a share sale abroad, the people said. Any float remains a long-term objective given ByteDance first needs to hire a chief financial officer and remains well-funded, the people said, asking not to be named because the matter is private. On Tuesday, the company publicly denied a Financial Times report that it planned a Hong Kong IPO in the first quarter.

ByteDance — whose TikTok is the venue of choice for half a billion lip-syncing, dancing music video aficionados — is unlikely to rush into an IPO in the middle of a bitter trade war and rising scrutiny from Washington. Two prominent senators have urged investigations into TikTok, labeling it a national security threat. Senator Marco Rubio has called for legislation to block U.S. government pensions from investing in Chinese corporations, another sign of growing suspicion of the world’s No. 2 economy.

Also read: US senators say TikTok poses national security threat, must be probed

Discussions around an eventual IPO come at a time when ByteDance needs new engines of growth with TikTok on the wane: Global downloads of the video app fell for the first time in the September quarter. It was TikTok that propelled ByteDance to a valuation of $75 billion, a global phenomenon that became one of the few Chinese internet companies to achieve global success.

This year, the Beijing-based giant hired executives to head up its business in the U.S. and India and is now seeking to expand its Australian and European teams to broaden its international reach, the people said. At the same time, ByteDance has been looking for a buyer for its U.S. news service TopBuzz, one of the people said, to rid itself of an under-performing business.

The company hasn’t yet hired investment bankers for its IPO and such a complex offering often takes several months of preparation once bankers and a finance chief are in place, one person said. The earliest likely timing of an IPO is the second half of 2020 even if a CFO is hired in the near future.

ByteDance, backed by SoftBank Group Corp., is one of the biggest threats to the dominance of Tencent Holdings Ltd., which operates in virtually every Chinese internet sphere from gaming and social media to payments. Tencent was down more than 1% on Tuesday in Hong Kong. “There is absolutely zero truth to the rumors that we plan to list in Hong Kong in Q1,” a ByteDance representative said in an emailed statement.

Also read: TikTok’s sensational appeal is beginning to fall around the world

A looming concern for ByteDance has always been the fact that it doesn’t have the government-required license to conduct news operations in China, according to the people familiar with the matter. Its first hit product was a news-aggregator called Toutiao, which remains in constant danger of running afoul of regulators. That’s one reason ByteDance has diversified its revenue base by expanding into short-video apps like Douyin and TikTok. Toutiao is now just a slice of its overall business, the people said.

For ByteDance to successfully launch an IPO, the larger issue may be rising scrutiny from Washington, which fears Beijing’s track record of censorship and TikTok’s influence over the content that American kids consume.

Facebook Inc. Chief Executive Officer Mark Zuckerberg called out TikTok this month, citing privacy and freedom of speech concerns. His remarks came after the Chinese firm drew criticism for allegedly scrubbing its platform of politically sensitive content, such as videos of pro-democracy protests in Hong Kong. TikTok, which has denied those allegations, announced this month it has formed a team that includes two former U.S. lawmakers to review its content moderation policy.

“TikTok is a potential counterintelligence threat we cannot ignore,” Republican Senator Tom Cotton and Senate Minority Leader Chuck Schumer said in a letter Thursday to Acting Director of National Intelligence Joseph Maguire.- Bloomberg 

Also read: Most adults don’t know what TikTok is. That’s by design


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