ByteDance boosts share price in latest buyback and plans record $9.5bn loan (Reports)

TikTok’s parent company ByteDance has reportedly increased its share price in a new buyback program, and plans to carry out a multi-billion dollar financing as it seeks to reinforce its financial position and diversify its business beyond social media and online advertising.

ByteDance has raised its employee share buyback price to $181 per share for current employees and $154 per share for former employees. That marks an increase from ByteDance’s buyback this past spring that offered to repurchase shares at $171 apiece from current employees and $145 per share from former employees. The Information reported, citing secondary market trades, that the latest move lifted ByteDance’s valuation to close to $230 billion.

In late 2023, ByteDance made a proposal to buy back its own shares from investors and employees at a price of $160 per share. This put the company’s valuation at over $200 billion, people familiar with the matter told The Wall Street Journal at the time.

The latest reported move comes amid ByteDance’s continued growth and increasing influence in the tech sector. Since its establishment in 2012, the company has experienced rapid expansion, driven by the popularity of its platforms in both China and international markets. In 2023, ByteDance’s profit jumped 60% year over year to more than $40 billion from about $25 billion the year before, outpacing the growth of its Chinese peers Tencent Holdings and Alibaba Group.

In addition to the share buyback, ByteDance is reportedly seeking a $9.5 billion loan, which would be the largest dollar-denominated corporate facility in Asia outside of Japan.

Bloomberg reports that Citigroup, Goldman Sachs, and JPMorgan are coordinating the financing, which has a tenor of three years with the option to extend to five years. The loan is expected to help ByteDance refinance an existing $5 billion dual-tranche facility raised in 2021, as well as provide additional working capital.

The $9.5 billion loan is larger than initially expected, signaling ByteDance’s desire to capitalize on the liquidity in Asia’s loan market, Bloomberg said. Back in August, ByteDance was reported to be eyeing a $5 billion loan to refinance its 2021 debt.

ByteDance’s new loan facility reportedly includes a greenshoe option, allowing the company to increase the loan amount beyond the initial $9.5 billion if demand warrants. The loan carries an opening interest margin of 85 basis points over the benchmark Secured Overnight Financing Rate (SOFR).

The latest reported move comes despite a general slowdown in dollar loan volume across Asia, with a 44% drop in the first half of the year, Bloomberg said.

It also comes as ByteDance continues to diversify its business beyond its core strength in social media and online advertising. The company is investing heavily in areas like e-commerce and generative AI, mirroring similar moves by other Chinese tech giants.

Overseas, ByteDance is expanding its live shopping platform to more European markets, following its success in the US. The move is part of ByteDance’s strategy to leverage TikTok’s massive user base and engagement to tap into the growing e-commerce sector.

ByteDance and its TikTok platform are currently fighting in court against a law passed earlier this year that requires the tech giant to divest its US operations or face a ban in the United States.Music Business Worldwide