Abu Dhabi’s G42 enters TikTok parent ByteDance for $100 million

Abu Dhabi: TikTok owner ByteDance Ltd. is valued at about $220 billion after a private market investment by Abu Dhabi artificial intelligence firm G42 – up from the $300 billion set in the recent share buyback plan. Great discount compared to USD.

In recent months, G42 has acquired more than $100 million in stakes from existing investors through its 42XFund. Not long after, another fund bought ByteDance for $225 billion.

The Chinese internet company’s rising price tag reflects uncertainty since Washington said it may be open to clamping down on the viral video phenomenon TikTok, which U.S. lawmakers have accused of posing a threat to national security. TikTok’s leadership is discussing the possibility of a separation from its Chinese parent company to help address those concerns, albeit as a last resort.

ByteDance’s valuation in the G42 deal has yet to reflect the potential fallout from a Silicon Valley bank implosion that has rattled start-ups from the US to China and raised concerns about wider systemic risks. It’s still well below the peak of about $460 billion in 2021 when Tiger Global Management buys shares.

The G42’s interests range from cloud computing to vaccines and driverless cars. The Middle Eastern company may bet on ByteDance’s long-term potential, as a rebound in China’s economy underpins the tech giant’s rise from three years of Covid restrictions and endless regulatory crackdowns.

The growing enthusiasm for AI since ChatGPT’s blockbuster public launch could also benefit ByteDance, which pioneered algorithms a decade ago to keep users hooked on videos and news. A representative for 42XFund declined to comment. A ByteDance spokesman did not immediately respond to a request for comment.

In the longer term, some investors believe parts of China’s troubled tech sector may finally return to growth despite lingering doubts about Beijing’s intentions with the private sector. Since last year, Xi Jinping’s government has repeatedly reassured investors and entrepreneurs of its pro-business stance.

ByteDance, which gained a foothold in the U.S. through the acquisition of TikTok’s predecessor, is one of a handful of Chinese app developers to have found success overseas. The curated club includes upstarts such as fast-fashion supplier Shein Group, AliExpress and PDD Holdings Inc.’s off-price app Temu.

ByteDance’s premium service has attracted advertisers keen to reach a younger demographic. It’s eager to find a niche by selling goods to millions of social media users through live broadcasts around the world.

That popularity spooked some in Washington. The White House last week approved a bipartisan bill that could give the president the power to ban or force a sale of TikTok — a potential major blow to the Chinese company’s international ambitions.

A ByteDance IPO — the company has explored options including Hong Kong and the U.S. — remains elusive given volatility in global markets. Last September, the Beijing company offered to buy back $3 billion of its own shares at a valuation of about $300 billion, giving existing backers such as Susquehanna International Group and Sequoia Capital a way to cash in some of their gains.

ByteDance, which is also backed by SoftBank Group Corp and Temasek Holdings, is in no rush for cash after TikTok alone generates about $12 billion in revenue in 2022.