The Abu Dhabi AI firm G42 owned by the Spy Chief of UAE has invested in ByteDance. The Company was valued at about $220 billion in a recent private market by Abu Dhabi artificial intelligence firm G42, a significant discount to the $300 billion set in the TikTok owner’s recent share buyback program.
G42, controlled by the UAE’s royal Sheikh Tahnoon bin Zayed Al Nahyan, has bought more than $100 million in securities from existing investors through its 42XFund fund in recent months, people with knowledge of the deal said. Another fund bought ByteDance for $225 billion shortly after, one of the people said, asking not to be identified and describing the information as non-public.
The Chinese internet company’s price tag reflects uncertainty after Washington said it could be open to a ban on the viral video phenomenon TikTok, which lawmakers have blamed as a national security threat. The management of TikTok is discussing the possibility of breaking up with its Chinese parent company to solve these problems, although this is a last resort.
Abu Dhabi AI firm G42 has invested in ByteDance.
ByteDance’s valuation in the G42 deal does not yet reflect the potential fallout from the collapse of Silicon Valley Bank, which has shaken startups from the US to China and raised concerns about broader systemic risks. It will peak at about $460 billion in 2021, when Tiger Global Management buys shares.
Sheikh Tahnoon – known as a spy for the United Arab Emirates – has built a portfolio with G42 in everything from cloud services to vaccines to driverless cars. Last year, his artificial intelligence company launched the $10 billion 42XFund, which has other financial backers to invest in technology companies in emerging markets. It recently hired Jason Hu, a former chief investment officer of China’s JD.com Inc., to expand its footprint in Asia.
The Middle Eastern company could be betting on ByteDance’s long-term potential as China’s recovering economy supports tech giants emerging from three years of Covid restrictions and endless regulatory crackdowns.
Value gyrates as uncertainty persists about its US operation
The growing enthusiasm for artificial intelligence after the sensational public launch of ChatGPT could also benefit ByteDance, which a decade ago developed algorithms to attach users to videos and news. 42XFund representatives declined to comment. A spokesperson for ByteDance did not immediately respond to a request for comment.
Longer term, some investors believe parts of China’s struggling technology sector could eventually return to growth, despite lingering doubts about Beijing’s private sector intentions. Since last year, Xi Jinping’s government has repeatedly assured investors and entrepreneurs of its pro-business stance.
Last September, the Beijing-based company offered to buy back $3 billion of its shares, worth about $300 billion, giving existing backers such as Susquehanna International Group and Sequoia Capital a chance to cash in on some of its profits. ByteDance, which is also backed by SoftBank Group Corp and Temasek Holdings Pte, does not need cash urgently, with TikTok alone estimated to generate $12 billion in revenue by 2022.