(Bloomberg) -- ByteDance Ltd. was valued at around $220 billion in a recent private-market investment by Abu Dhabi AI firm G42, a significant discount to the $300 billion that TikTok’s owner set during a recent share buyback program.
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G42, controlled by United Arab Emirates royal Sheikh Tahnoon bin Zayed Al Nahyan, acquired a $100 million-plus stake from existing investors in recent months through its 42XFund, people with knowledge of the deal said. Another fund bought into ByteDance at a $225 billion shortly after, one of the people said, asking not to be identified describing non-public information.
The Chinese internet firm’s gyrating price tag reflects the uncertainty that’s set in since Washington signaled it may be open to outlawing viral video phenom TikTok, which lawmakers have accused of being a national security threat. TikTok’s leadership is discussing the possibility of separating from its Chinese parent to help address those concerns, though that’s a last resort.
ByteDance’s valuation in the G42 transaction doesn’t yet reflect potential after-effects of the Silicon Valley Bank implosion, which stunned startups from the US to China and has raised concerns about broader systemic risks. It remains well off a peak of around $460 billion in 2021 when Tiger Global Management bought shares.
Sheikh Tahnoon — known as the UAE’s spymaster — has built a portfolio through G42 in everything from cloud computing to vaccines and driverless cars. Last year, his AI firm set up the $10 billion 42XFund, which has additional financial backers, to invest in technology companies across emerging markets. It recently hired Jason Hu, the former investment head with China’s JD.com Inc., to expand its footprint across Asia.
The Middle Eastern firm may be betting on ByteDance’s longer term potential, as a rebounding Chinese economy buttresses tech giants emerging from three years of Covid restrictions and endless regulatory crackdowns.
Growing enthusiasm for AI since ChatGPT’s sensational public rollout could also benefit ByteDance, which pioneered algorithms a decade ago to get users hooked on videos and news. Representatives for 42XFund declined to comment. A ByteDance spokesperson didn’t immediately respond to a request for comment.