SoftBank Group, KKR and General Atlantic plan to make a giant investment in fast-rising Chinese Internet player Bytedance, according to people familiar with the matter, a deal that could make it the world's biggest start-up.
The latest round may value Beijing Bytedance Technology, parent of news aggregator Toutiao and video sensation Tik Tok, at around US$75 billion (S$102 billion) before investment, said the people, who requested not to be named because the matter is private.
SoftBank is initially targeting an investment of about US$1.5 billion though it is unclear how big its final cheque will be, the people said. While KKR and General Atlantic have led discussions, SoftBank could play a much bigger role if its investment approaches the outsized amounts it is known for.
Six-year-old Bytedance, which was said to be seeking about US$3 billion in the current round, started out by using artificial intelligence to personalise content for users, but has successfully branched out into short video via a service called Douyin, known as Tik Tok abroad. That service had 500 million monthly active users as of July. It also owns the Musical.ly app, which has about 100 million users and is being merged with Tik Tok, the company said last month.
The deal is still in discussions and terms could change, the people said. Bytedance and SoftBank representatives declined to comment. General Atlantic had no immediate comment, while KKR did not respond to an e-mailed query.
Digital news site The Information first reported that the Chinese company was in talks with SoftBank and KKR about a deal.
Bytedance is among the largest of a new generation of Chinese Internet giants challenging the longstanding dominance of Tencent and Alibaba. Unlike peers such as Didi or Meituan, it has grown without the backing of either Tencent or Alibaba into one of the country's most popular online services.
At US$75 billion, Bytedance would eclipse Uber Technologies, valued at US$72 billion according to CB Insights data. It would also surpass ride-hailing rival Didi Chuxing's US$56 billion. Closely held Ant Financial, an affiliate of Alibaba's, is said to be valued at US$150 billion but CB Insights does not count it as privately backed.
The funding round comes despite Chinese content providers facing one of the harshest Internet crackdowns in the country's history and a funding squeeze that has pinched smaller start-ups.
Bytedance, like many of its competitors, has seen several apps either temporarily pulled from Chinese app stores or shut entirely on the orders of regulators over allegedly inappropriate content.
SoftBank's arrival could mark a new chapter for the Chinese company. Founder Masayoshi Son is known for taking an active hand in developing companies in his portfolio, which include Uber and WeWork through its Vision Fund.