(Bloomberg) — ByteDance Ltd. has downsized its powerful investment arm, anticipating Beijing will soon tighten curbs on the prolific deal-making that turbocharged the growth of China’s largest internet companies.
TikTok’s owner is dissolving the internal venture capital and investing team that makes bets on promising startups, people familiar with the matter said. A separate strategic investments arm, which focuses on backing companies that can help its own businesses, is undergoing a radical overhaul that will see it pull back from deals as well, they said, asking not to be identified discussing internal matters.
The retreat comes as regulators threaten to smother the flurry of deals that ByteDance, Tencent Holdings Ltd. and Alibaba Group Holding Ltd. cut annually, which Beijing regards as helping shore up dominance over spheres from social media and gaming to e-commerce. The Cyberspace Administration of China is drafting guidelines that will require any company with more than 100 million users or over 10 billion yuan ($1.6 billion) of revenue to seek the watchdog’s approval before making investments or raising funds, Reuters reported Wednesday, citing unidentified sources.
Beyond those three internet players, other companies that meet that criteria include food delivery giant Meituan, embattled ride-hailing leader Didi Global Inc., the Twitter-like Weibo Corp., search leader Baidu Inc. and JD.com Inc., Alibaba’s closest rival. Even smaller players like livestreaming firms Bilibili Inc. and Kuaishou Technology wouldn’t be exempt.
Read more: China Venture Funding Hits Record $131 Billion Despite Crackdown
ByteDance would be among the first to take pre-emptive action. While the CAC’s guidelines as reported have yet to go into effect, its goal of exerting influence over data security through scrutinizing funding activity is clear. The internet industry overseer has issued a spate of other regulations governing overseas listings and the complicated structures through which startups receive foreign capital.
ByteDance made the decision early this month to focus on strengthening its business and reducing the number of investments, the company said in an emailed statement. It will also re-deploy part of its strategic investments team to other business lines, it said without elaborating. News of ByteDance’s overhaul was first reported by Chinese media including Jiemian.
It’s unclear whether Alibaba and Tencent will follow suit. Since late 2020, antitrust regulators have levied fines on scores of deals cut during the go-go era of the past decade, chilling investment across much of the internet sector.
China’s internet companies have achieved massive scale partly through an unprecedented investment spree over the past decade. Alibaba and Tencent in particular had evolved into industry king-makers, vying to lock in stakes and board seats in up-and-coming startups. Meituan, JD and Didi achieved scale in part because of their ties to Tencent and its WeChat ecosystem of a billion-plus users.
In recent years, ByteDance — one of the few tech successes that have eschewed investment from Alibaba and Tencent — had also ramped up its own pace of acquisitions, to expand into new arenas such as educational gadgets and services.
ByteDance’s strategic investment arm has been headed by Zhao Pengyuan, who reports directly to TikTok CEO Chew Shouzi, the people said. Chew, ByteDance CEO Rubo Liang and TikTok-creator Alex Zhu sit on a committee that green-light investment activity. Among the deals cut over the past year, ByteDance bought virtual reality headset maker Pico and game studio Moonton, and backed firms including self-driving startup QCraft.
The scale of investment has been astonishing: Tencent alone controls a portfolio estimated at $185 billion. But that deal spree is also increasingly at odds with Xi Jinping’s intention of getting its richest individuals and corporations to share the wealth and boost rural incomes.
Beijing’s tech sector crackdown is already fundamentally altering investment flows.
In past months, Tencent announced it was giving away $16 billion worth of shares in JD and selling down its slice of Singapore’s Sea Ltd. Those surprise moves were seen as a response to Beijing’s push to curb anticompetitive behavior and open up closed ecosystems.
Venture capital investments in China leapt 50% to a record $131 billion in 2021 — but much of that growth was driven by flows into hardware and scientific technologies that Beijing openly espouses, from semiconductors to computing.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
