HSG's continuation fund to value ByteDance at up to $370 billion, sources say

By Kane Wu HONG KONG, Jan 7 (Reuters) – Venture capital firm HSG, formerly Sequoia Capital China, is raising a continuation fund that will take over some of its ByteDance shares at a valuation of between $350 billion and $370 billion, two people with knowledge of the matter said. A continuation fund (CV) is a new vehicle floated by a private equity firm to transfer holdings of existing investments. The valuation is above the level implied by recent share buybacks by TikTok owner ByteDance, but below that signalled by a November stake purchase. HSG aims to move shares in several portfolio companies backed by funds nearing the end of their investment cycle into the CV, said the two sources and a third person with knowledge of the fundraising. Limited partners, or investors in the maturing funds, will have the option to sell their stakes in those portfolio companies during the CV fundraising to other investors. ByteDance shares will dominate the new vehicle, said the three sources, who declined to be named as the information is not public. HSG owns just over 11% of ByteDance as one of the social media giant's largest external shareholders, said one of the people. It is unclear how much of that stake will be rolled into the CV. HSG declined to comment. ByteDance did not respond to a request for comment. Trade publication AVCJ first reported the CV on Wednesday. LEADING PLAYER ByteDance's valuation has soared in the past year, driven by strong revenue growth despite the lengthy TikTok U.S. separation process. ByteDance's first- and second-quarter 2025 revenues both topped those of Facebook and Instagram owner Meta, making it the world's No. 1 social media company by sales, Reuters has reported. Revenues continued to grow in the following two quarters and ByteDance's 2025 annual profit could reach about $48 billion, said one of the sources and a separate person familiar with the company's financial details. It also emerged as China's leading player in consumer AI apps in 2025 thanks to its chatbot Doubao, which has the country's largest market share by monthly active users. In November, Chinese venture firm Capital Today won an auction to acquire a chunk of ByteDance shares from Bank of China's private equity arm in the private secondary market, valuing the company at $480 billion, one of the sources and a fifth source said. The two firms did not respond to Reuters' requests for comment. ByteDance in the third quarter launched an employee share buyback at a valuation of more than $330 billion, up 5.5% from the previous buyback in March, sources have said. The company in November offered existing investors a new round of share buybacks at a valuation similar to the employee buyback, said a sixth person familiar with the situation. HSG first invested in ByteDance in 2014 when it was part of the Sequoia Capital family in a funding round that valued the firm, then operating only its popular news aggregation app Toutiao, at $500 million, according to previous media reports. HSG separated from Sequoia U.S. in 2024. Its founder and managing partner Neil Shen remains one of ByteDance's five board members. (Reporting by Kane Wu. Editing by Sumeet Chatterjee and Mark Potter)

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