Owner of China's Top News-Aggregation App in IPO Talks

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Beijing Bytedance Technology headquarters in Beijing last year. The company, best known for the Jinri Toutiao news-aggregation app, is considering a large Hong Kong IPO.

Beijing Bytedance Technology headquarters in Beijing last year. The company, best known for the Jinri Toutiao news-aggregation app, is considering a large Hong Kong IPO.


Photo:

Bloomberg News

The owner of China’s most popular news-aggregation app is holding discussions about a multibillion-dollar initial public offering that could take place this year, according to people familiar with the matter.

Beijing Bytedance Technology Co. is considering a Hong Kong IPO that may value it at over $45 billion, the people said. It isn’t clear how much Bytedance intends to raise, but it would join a rush of Chinese internet and technology startups going public.

Bytedance’s potential listing shows both the eagerness of Chinese tech companies to go public and the continued appetite for such IPOs, especially those helping to transform the consumer landscape.

The six-year-old company 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.

A spokesman for Bytedance said the company “doesn’t currently have plans for an IPO.”

Bytedance was valued at more than $20 billion in an equity fundraising round in late 2017, according to people familiar with the company. Earlier this year it raised around $300 million by selling convertible bonds to U.S. private-equity firm KKR & Co. The company’s other shareholders include Sequoia Capital and tech investment firm DST Global, according to Dow Jones VentureSource. After this article was published, DST said it hasn’t invested in Bytedance.

Some Bytedance shares recently changed hands in private transactions at prices that implied a valuation of around $40 billion, said a person familiar with the matter.

The company is hoping to take advantage of what are still relatively hospitable market conditions for IPOs and major technology stocks, according to one person familiar with the company. Despite recent price declines, shares of Chinese internet giants

Alibaba Group Holding
Ltd.

and

Tencent Holdings
Ltd.

are still up more than 30% from a year ago.

Chinese smartphone maker

Xiaomi
Corp.

, whose shares started trading in Hong Kong Monday after it completed a $4.7 billion IPO, had a lackluster first day before soaring Tuesday. Investors rushed to buy Xiaomi’s shares after two major index providers said they would include it in benchmarks widely followed by local and global investors.

Meituan Dianping, a fast-growing Chinese startup that provides a range of online services, recently filed plans for a large IPO in Hong Kong in the coming months, aiming for a market valuation of more than $60 billion, the Journal previously reported.

Global investors think the trio of Bytedance, Meituan Dianping and ride-hailing giant Didi Chuxing Technology Co. will reshape the consumer landscape in China. Didi has held discussions about an IPO that could value it at over $70 billion, though the share sale is now more likely next year, people familiar with the transaction said. A Didi representative declined to comment.

Bytedance may also hold off its IPO plans until the first quarter of next year, said a person familiar with the situation.

One rival of Bytedance’s Jinri Toutiao, Tencent-backed Qutoutiao, has been talking with investors about its own coming IPO in the U.S., according to a person familiar with the matter.

Some of Bytedance’s popular apps have recently drawn scrutiny from Chinese regulators.

In April, citing “vulgar” and “improper” content, censors closed one that allowed people to share jokes and humorous videos. Bytedance founder

Zhang Yiming

apologized publicly for creating a product that “collided with core socialist values.”

More recently, Chinese authorities ordered Bytedance to suspend ads on Douyin after a promotional spot for the app on a search engine made light of a venerated Chinese soldier in the Korean War. Douyin, which has many videos of lip-syncing teenagers and cute animals, was the most-downloaded app on China’s

Apple

store earlier this year, according to analytics firm AppAnnie.

Write to Julie Steinberg at julie.steinberg@wsj.com and Stella Yifan Xie at stella.xie@wsj.com

Appeared in the July 11, 2018, print edition as ‘Bytedance Sizes Up Potential Listing.’

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