Exclusive | ByteDance looks to list Douyin in New York, seizing on new mood in Biden administration and strong demand for China tech stocks
- Listing in New York has gained traction with ByteDance’s investors after Joe Biden’s inauguration as the 46th US president, according to a source
- A US listing is not mutually exclusive with raising funds in Hong Kong, as ByteDance can follow with a secondary listing in Asia’s second-largest capital market
ByteDance, one of China’s most valuable technology unicorns, is looking to raise capital in the United States by listing the shares of its China-only short video sharing application Douyin in New York, according to a source familiar with the plan.
The New York listing is still under preliminary discussion, but it has gained traction with ByteDance’s investors after Joe Biden’s inauguration as the 46th US president, according to the source, who declined to be identified as speaking on a confidential matter.
A US listing is not mutually exclusive with raising funds in Hong Kong, as ByteDance can follow with a secondary listing in Asia’s second-largest capital market, following in the footsteps of other technology champions like Alibaba Group Holding, JD.com and NetEase. A New York listing by Douyin would be the first initial public offering (IPO) by a Chinese social-media network in the US, giving American investors a piece of one of the most successful apps in the world’s largest internet market.
“The general response [from ByteDance investors] is, ‘Why not?’,” the source said. “Hong Kong will be crazy about Douyin, everyone can see that after the Kuaishou listing … but Douyin will be hot in the US market as well. Just look at the price surges of China tech stocks there.”
TikTok, with 689 million worldwide daily users, contributed US$1 billion in revenue to ByteDance’s 2020 revenue of US$37 billion, according to data by Reuters and The Information.
An IPO by Douyin is a logical option for ByteDance because the app is more mature in its revenue stream and profits, according to another source. ByteDance founder and CEO Zhang Yiming is willing to wait for the best outcome, and a premature listing by TikTok with an underwhelming valuation would not be desirable, said the source, who has worked with Zhang before.
Zhang, 37, previously credited his success to “delayed gratification”, where he is willing to wait patiently for his business to grow and avoid any hasty temptations to cash out.
ByteDance, valued at close to US$180 billion, based on its latest fundraising plans in November, has been mulling over different options to spin off its businesses. The company, founded in 2012, counts some of the world’s biggest venture capital funds as investors, including Tiger Global Management, KKR, SoftBank’s Vision Fund, the General Atlantic, Sequoia Capital China and Yunfeng Fund.
One plan reported by Reuters in October had Douyin listing in Hong Kong. A November report by 36Kr said that the Beijing-based company was planning to package Douyin with its news aggregation app Jinri Toutiao and its video platform Xigua Video for a stock sale in Hong Kong.
ByteDance is looking for a new business structure for TikTok. Neither ByteDance nor Douyin has been slapped with any ban or been put on any US sanctions list.
Shares of Pinduoduo, a China e-commerce firm, have soared 57 per cent since the Shanghai-based company’s November IPO, valuing it at US$242 billion, almost 60 per cent the capitalisation of Walmart.
Shares of Bilibili, a Shanghai-based video-sharing app and the closest comparable rival to Douyin, have jumped 13-fold since the unprofitable company listed in March 2018, valuing it at US$53 billion.
As many as 30 China-domiciled companies raised US$11.7 billion through IPOs in the US last year, according to data by Renaissance Capital, the highest annual rush since Alibaba’s US$25 billion IPO in 2014. The owner of the Post still holds the record as the largest Chinese company to list in the US.