Abu Dhabi AI firm G42 recently invested in ByteDance at a valuation of approximately $220bn, a significant discount compared to the $300bn valuation set by TikTok’s owner in a recent share buyback program. G42, which is controlled by UAE royal Sheikh Tahnoon bin Zayed Al Nahyan, purchased a $100m-plus stake through its 42XFund from existing investors over the past few months. Another fund reportedly invested in ByteDance at a valuation of $225bn shortly after.
The fluctuating valuation of ByteDance reflects the uncertainty caused by the potential ban of TikTok, which lawmakers in the US have accused of being a national security threat. To address these concerns, TikTok’s leadership is reportedly discussing separating from its Chinese parent, although this is considered a last resort.
The recent valuation of ByteDance in the G42 transaction does not yet reflect the potential impact of the Silicon Valley Bank implosion, which has raised concerns about broader systemic risks. However, some investors believe that China’s tech sector will recover in the long term, despite lingering suspicion about Beijing’s intentions for the private sector.
ByteDance gained a foothold in the US by acquiring TikTok’s predecessor and is one of the few Chinese app developers to have achieved international success. Its flagship service, TikTok, draws advertisers looking to reach a younger demographic and has carved out a niche selling goods to millions of social media users via livestreams around the world. However, the popularity of TikTok has spooked some in Washington, leading the White House to endorse a bipartisan bill that could grant the president the authority to ban or force a sale of the app.
Despite being backed by SoftBank Group and Temasek Holdings Pte, ByteDance isn’t in urgent need of cash, as TikTok alone generated an estimated $12bn in revenue in 2022. Although the company has explored options for an IPO, global market volatility means this is unlikely to happen soon.