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By Arghyadeep Dutta, 12:00 pm ET:
ByteDance Ltd, the Chinese owner of short video-sharing-focused social media platform TikTok, reportedly put an indefinite hold on its plans for offshore listing earlier this year after Beijing asked the company to focus on addressing data security risks.
The Beijing-based tech giant, last valued at $180 billion in a funding round in December, had been weighing an IPO of all or some of its businesses in the U.S. or Hong Kong, the Wall Street Journal reported on Monday, citing people familiar with the matter.
Zhang Yiming, the founder and former CEO of ByteDance, decided to postpone the planned IPO indefinitely in late March after meeting the Cyberspace Administration of China (CAC), who told the firm to address different issues including data security, the report mentioned.
At the meeting with the regulators, the company was asked about how it collects, stores, and manages data, as ByteDance runs apps used by millions in China, including the short-video app Douyin, the Chinese version of TikTok, and Jinri Toutiao. Personal information collected by Douyin includes mobile phone numbers, birthdays, real names, and ID numbers.
Sources told WSJ that ByteDance also didn’t have a chief financial officer at the time, which forced it to delay the listing. However, it hired Shou Zi Chew, a former executive at Chinese smartphone maker Xiaomi, as its CFO in March, which fueled speculation of a potential IPO.
Bytedance, on April 23, said in a statement on its social media account, “After serious research, we think the company does not fulfill the necessary requirements to go public, and currently have no such plan.”
The Chinese tech company, whose shareholders include KKR & Co and Sequoia Capital, is one of the world’s most valuable startups. Last year, ByteDance’s earnings doubled to $34.3 billion as advertising on its platforms grew, while gross profit rose to $19 billion, the Journal reported.
The news comes days after Chinese regulators launched a probe into homegrown ride-hailing service DiDi Chuxing, which listed itself as DiDi Global Inc on NYSE last month.
DiDi raised $4.4 billion through U.S. listing but is now under the scrutinization of CAC and has since had its main smartphone app for ride-hailing and 25 other apps it operates removed from Chinese app stores.
Last week, China Securities Regulatory Commission (CSRC) proposed amending draft cybersecurity-review rules for the tech companies with more than a million users, must undergo a cybersecurity review if they are seeking for overseas listing.
Previously, Chinese firms didn’t typically need the cyberspace administration’s permission for overseas listing. However, as the U.S.-China tensions deepened towards the end of 2020, Beijing asked tech companies to inform about it and seek informal approval, sources from the agency told WSJ.
Picture Credit: FT