ByteDance Draws ADIA, Coller to Primavera Continuation Fund Echo Wong and Cathy Chan Middle East sovereign wealth fund Abu Dhabi Investment Authority and private equity firm Coller EQT are in talks to back a continuation vehicle anchored by a stake in Chinese tech giant Byte Dance, according to people familiar with the matter. The continuation fund is being arranged by Primavera Capital, a long-time Byte Dance investor, and is targeting around $1 billion, one of the people said, asking not to be named discussing private matters. The private equity firm will move the Byte Dance shares and a smaller stake in Ant Group from its Primavera Capital Fund III into the new vehicle, valuing the two stakes at about a 30% discount to their combined net asset value of $1.5 billion, the person said.
The implied valuations for Byte Dance could range from $400 billion to $450 billion, depending on how investors allocate the discount between the two stakes. That is below where the stake is marked in the current vehicle but it represents a big jump from Byte Dance’s valuation during a similar transaction earlier this year, when private equity firm HSG transferred a stake into its own continuation vehicle. ADIA is looking to put some $400 million to $600 million into the new Primavera fund, while Coller EQT will invest between $100 million and $200 million, one of the people said.
The ultimate size of the new vehicle isn’t finalized and the process could change. Some investors, including existing ones in the older vintage, are still considering whether to join, the people said. Primavera Capital Fund III holds a $1.2 billion stake in Byte Dance and around $275 million of Ant Group, according to a person familiar with the matter.
Its recent marks imply a $600 billion valuation for Byte Dance and $120 billion for Ant, the people said. Spokespeople at Coller EQT, Primavera and ADIA declined to comment. Byte Dance didn’t respond to an emailed request for comment.
Continuation vehicles have become a popular way for private equity firms to prolong their exposure to long-term investments while giving their own investors a way to get their money back. Globally, secondaries deals for private assets have gained momentum in recent years, with continuation fund deals reaching $65 billion in the first half of this year, according to an Evercore Inc. report. Earlier this year, shares in Byte Dance were used to anchor a continuation fund by HSG, formerly known as Sequoia Capital China.
The holdings of Byte Dance in the new vehicle implied a valuation of about $370 billion. Ant, which operates payments platform Alipay, was valued at $150 billion in 2018 when a group of international investors including Primavera took part in a $14 billion private funding round. Primavera Capital Fund III is an eight-year-old fund which had around $3.9 billion of assets at the end of March.
The vehicle still holds other assets, one of the people said.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing