TikTok owner ByteDance offers to buy back US$5 billion worth of investor shares as IPO prospects remain slim

Beijing-based ByteDance, the owner of TikTok, is offering to buy back up to US$5 billion worth of shares from existing investors as its initial public offering plan remains up in air, according to sources briefed on the matter.

The price offered to investors is similar to the US$160 per share offered to employees, which puts the company's total valuation at US$268 billion, or about 10 per cent lower compared with the value a year ago when it conducted a US$3 billion share buy-back plan for earlier investors, one source, who declined to be named as the matter is private, told the South China Morning Post.

ByteDance declined to comment.

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ByteDance, founded by Chinese entrepreneur Zhang Yiming, remains China's most valuable unicorn due to the popularity of its hit short video app TikTok in the US, and Douyin, the sister version in China.

According to earlier reports by tech news outlet The Information, the company is on its way to catch up with Meta, the parent company of Facebook, in terms of revenues with a surge of 40 per cent in the second quarter. At home, ByteDance's revenues exceeded those of Tencent Holdings, China's social media and video gaming giant, in the second quarter, ousting Baidu from China's top three Big Tech companies - known by the acronym BAT. The "A" is for Alibaba Group Holding, which owns the Post.

As a private company, ByteDance has no obligation to disclose its financial details or share buy-back plans.

At the same time, prospects for its initial public offering remain remote amid intense scrutiny over TikTok's links with China by US lawmakers. The video app is also facing challenges in other overseas markets.

In September, TikTok was forced to suspend TikTok Shop in Indonesia. The e-commerce service was meant to turn the app's popularity into revenue. TikTok is now in talks with Jakarta-listed GoTo to resuscitate its e-commerce business in the Southeast Asian country, the Financial Times reported.

ByteDance has also made a big retreat from video gaming in China. It fired hundreds of employees at its main gaming unit, Nuverse, which informed employees a few days ago that it will shut down most projects not yet online, the Post reported earlier.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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