Beijing Bytedance Technology Seeks to Raise $3 Billion Privately



Beijing Bytedance Technology Co. has kicked off an equity-fundraising round that could value the owner of China’s most popular news-aggregation app at as much as $75 billion.

The company is aiming to raise around $3 billion, according to people familiar with the matter. That amount could change and there is no guarantee Bytedance will achieve its targeted valuation.

Some Bytedance shares recently changed hands in private transactions at prices implying a valuation of around $62 billion, one of the people said. Bytedance was valued at more than $20 billion in a fundraising round in late 2017.

A valuation of $75 billion would make the fast-growing Bytedance one of the world’s most valuable private technology companies, eclipsing ride-hailing giant Uber Technologies Inc. and its Chinese counterpart Didi Chuxing Technology Co. Bytedance would still rank below

Jack Ma’s

financial-technology firm Ant Financial Services Group, which was valued at around $150 billion after a recent fundraising round.

Chinese technology companies have commanded high private valuations in recent months, as many make plans to go public in the coming year. But investors, bankers and entrepreneurs have been monitoring private and public valuations closely after last month’s lackluster IPO of Chinese smartphone maker

Xiaomi
Corp.

and trade tensions with the U.S. The outcome of Bytedance’s latest fundraising effort could be an important marker.

Six-year-old Bytedance owns Jinri Toutiao—“Today’s Headlines”—a mobile app that provides news headlines and third-party content for millions of Chinese based on their interests and viewing history. It also owns two popular short-video apps in China, and last year acquired Musical.ly, a U.S. short-video streaming app, for close to $1 billion. Musical.ly earlier this month merged with TikTok, one of the short-video apps.

Bytedance expects to use the fundraising proceeds to expand globally as well as to work on its apps domestically, people familiar with the company’s plans said. Most of the funds it has raised so far have come from international investors including venture-capital firm Sequoia Capital and private-equity firms General Atlantic and

KKR

& Co., the people said. Existing investors also include Chinese investment firm Hillhouse Capital Group.

The company has been contacting international investors for this round too, the people said.

Bytedance’s fundraising drive comes ahead of a potential multibillion-dollar IPO in Hong Kong. The Wall Street Journal reported last month that the company could go public this year or next.

Even as the company’s ambitions soar, it faces some challenges at home. Several apps in its fold have come under regulatory pressure this year as Chinese authorities clamp down on content they deem unsavory.

In April, regulators permanently shut down Bytedance’s humor app, Neihan Duanzi, on the grounds it contained lewd content. That same week its news app, Jinri Toutiao, was also temporarily removed from app stores.

More recently, Bytedance apps have come under fire twice for flouting a new law aimed at protecting the reputation of China’s national heroes. In the second incident, in July, Douyin, the firm’s short-video app that has risen in popularity, was suspended from accepting advertisements for 10 days, a move one analyst estimated would cost Bytedance as much as 10 million yuan ($1.46 million) a day.

The company is also embroiled in a lawsuit with Chinese rival

Tencent Holdings
Ltd.

The two companies have had several high-profile run-ins in recent months, with Bytedance suing Tencent in June alleging its bigger competitor had intentionally blocked links to its short-video apps. Bytedance is seeking 90 million yuan in damages.

Write to Julie Steinberg at julie.steinberg@wsj.com and Liza Lin at Liza.Lin@wsj.com



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