Chinese technology giant ByteDance is considering listing its domestic business in Hong Kong or Shanghai, the people familiar with the matter told Reuters against the background of increasing tensions between China and the United States via its successful non-Chinese video app TikTok.
According to two people, the company prefers Hong Kong from the two venues. One of the two also said that ByteDance is also considering the option to list its smaller business outside of China – which includes TikTok, which is not available in China – in Europe or the United States.
The eight-year-old Beijing-based technology and media company originally wanted to be listed in a blockbuster deal as a combined entity, including TikTok and other companies, in New York or Hong Kong. With TikTok, smartphone users can film and upload short videos with special effects in seconds.
But ByteDance was in talks with exchange operator Hong Kong Exchanges and Clearing (HKEX) about the Chinese listing, said one respondent. The company also discussed this with Chinese securities regulators, the other two said.
Reuters previously reported that China accounts for the majority of ByteDance sales, which, according to a source, was around $ 16 billion in 2019.
According to two sources, an independent listing could value China’s business in Hong Kong or the Nasdaq-style STAR market in Shanghai at more than $ 100 billion.
Separate plans for business in China are being reviewed in the face of growing concerns about US regulatory oversight and uncertainty over whether an audit agreement signed between Beijing and Washington in 2013 that supports the listing of Chinese companies in the United States will remain intact.
The people interviewed by Reuters said the idea of splitting the entire company into two public lists and the discussions about the venue are preliminary and subject to change. You spoke on the condition of anonymity since the information was private.
Plans can also be complicated by some heavyweight ByteDance investors who want to take over TikTok worth $ 50 billion. TikTok is under pressure from U.S. regulators who have spoken about banning the app or selling ByteDance on suspicion that Beijing could force its owner to disclose information about U.S. 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 VALUES UP TO 140 BLN
Discussions about the two listings began, according to one source, before the investor’s plans for a separate TikTok buyout became known, but after the U.S. Foreign Investment Committee (CFIUS) began dealing with user data last year to deal with.
The plans for the two listings could also have no direct impact on how TikTok’s future will develop, the person said.
ByteDance was worth up to $ 140 billion earlier this year when one of its shareholders, Cheetah Mobile, sold a small stake in a private business, Reuters reported.
According to one of the people familiar with the matter, the company made a profit of around $ 2.9 billion in 2019. The company has a sales target of around 200 billion yuan ($ 28.62 billion) for 2020. TikTok is expected to generate sales of $ 1 billion in the same period.
Most of the revenue comes from advertising for apps related to its Chinese activities, including Douyin – a Chinese version of TikTok – and the news aggregator app Jinri Toutiao and the 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, founder of ByteDance, Zhang Yiming, announced a more independent human resources structure for the China business by appointing a dedicated chair and general manager for the China business while maintaining the role of global chairman himself.
The idea of the China business listing comes from the fact that diplomatic tensions between Beijing and the capitals have increased in other countries such as the United States, India and the United Kingdom.
Chinese companies listed in the U.S. are also facing tighter financial controls and stricter audit requirements from U.S. regulators, prompting a number of Chinese companies, including search engine giant Baidu and online travel company Trip.com Group, to abandon New Consider York listing and instead switch to a stock exchange closer to home.
Shanghai’s tech-heavy STAR market, which is seen as part of Beijing’s self-sufficiency campaign with core technologies, has become the second-largest IPO market worldwide this year after Nasdaq, raising $ 10.3 billion in deals. Hong Kong’s stock market was ranked third at $ 8.9 billion, according to refinitive data.