TikTok owner ByteDance valued at US$220 billion in deal with UAE spy chief, 27 per cent lower than in share buy-back

ByteDance’s valuation in the transaction from Abu Dhabi AI firm G42 doesn’t reflect potential after-effects of the Silicon Valley Bank implosion

G42 is controlled by Sheikh Tahnoon, known as the UAE’s spymaster, and has a portfolio with everything from cloud computing to driverless cars

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ByteDance headquarters in Beijing seen on September 16, 2020. Photo: AFP

Published: 2:00pm, 15 Mar 2023Updated: 5:32pm, 15 Mar 2023

ByteDance was valued at around US$220 billion in a recent private-market investment by Abu Dhabi artificial intelligence (AI) firm G42, a significant discount to the US$300 billion that TikTok’s owner set during a recent share buy-back programme.

G42, controlled by United Arab Emirates royal Sheikh Tahnoon bin Zayed Al Nahyan, acquired a US$100 million-plus stake from existing investors in recent months through its 42XFund, people with knowledge of the deal said. Another fund bought into ByteDance at US$225 billion shortly after, one of the people said, asking not to be identified describing non-public information.

The Chinese internet firm’s gyrating price tag reflects the uncertainty that has set in since Washington signalled it may be open to outlawing viral video phenom TikTok, which lawmakers have accused of being a national security threat. TikTok’s leadership is discussing the possibility of separating from its Chinese parent to help address those concerns, though that’s a last resort.

ByteDance’s valuation in the G42 transaction does not yet reflect potential after-effects of the Silicon Valley Bank implosion, which stunned start-ups from the US to China and has raised concerns about broader systemic risks. It remains well off a peak of around US$460 billion in 2021 when Tiger Global Management bought shares.

Sheikh Tahnoon – known as the UAE’s spymaster – has built a portfolio through G42 in everything from cloud computing to vaccines and driverless cars. Last year, his AI firm set up the US$10 billion 42XFund, which has additional financial backers, to invest in technology companies across emerging markets. It recently hired Jason Hu, the former investment head with China’s JD.com, to expand its footprint across Asia.

The Middle Eastern firm may be betting on ByteDance’s longer term potential, as a rebounding Chinese economy buttresses tech giants emerging from three years of Covid restrictions and endless regulatory crackdowns.

Growing enthusiasm for AI since ChatGPT’s sensational public roll-out could also benefit ByteDance, which pioneered algorithms a decade ago to get users hooked on videos and news. Representatives for 42XFund declined to comment. A ByteDance spokesman did not immediately respond to a request for comment.

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