Douyin IPO Revealed: Goldman Sachs will become the lead underwriter Kuaishou underwriters will be excluded

Written | Wang Pan

Recently, sitting on the applications of Douyin, Today's Headlines, Feishu, Watermelon Video and other applications, many of its companies have changed their names to "Douyin", and ByteDance (Hong Kong) Co., Ltd. has also changed its name to Douyin Group (Hong Kong) Co., Ltd. The outside world has speculated that this move may be related to its preparation for listing in Hong Kong.

Photon Planet asked a number of Douyin insiders to verify the matter, and they were told that they were unaware. We asked a number of investment bankers for verification and learned that there is no exact news of Douyin officially launching an IPO, but everyone generally believes that Douyin is currently preparing for the IPO.

The head of an institution that has long been engaged in the underwriting of US/Hong Kong stocks IPO told Photon Planet that although Douyin launched the IPO should establish certain cooperation with them, douyin has not informed it of the IPO, but according to his understanding, douyin itself must have been making corresponding preparations, but the current market environment is too poor, and it is not necessary to go public at this time.

"Many people who came to us at the beginning of the year to do Hong Kong IPOs have recently given up, the market is too pessimistic, this time the listing is very embarrassing, even if it is successful in the valuation, it has to be discounted a lot." According to the understanding of our team, Douyin is unlikely to officially launch an IPO in the last six months, in addition to the market environment, there are many unspeakable complex factors, so the real launch will be at least until the end of the year or the first half of next year. ”

A shareholder of Multi-Point Dmall also told Photon Planet that Multi-Point is also preparing for an IPO in the first half of this year, and the initial plan will be completed in the summer, but in the end, whether it is smooth or not depends on the market environment, if the market is very poor in the second half of the year, it does not rule out another extension, and Multi-Point has previously postponed an IPO.

Goldman Sachs will become the lead underwriter of the Douyin IPO

A number of investment bankers told Photon Planet that although the Douyin IPO schedule has not yet been released, there is almost no suspense, the world's top investment bank Goldman Sachs will become the main underwriter of the Douyin IPO, which stems from the good cooperation that Goldman Sachs has maintained with ByteDance and Zhang Yiming in the past few years.

Photon Planet asked an insider of the Goldman Sachs Team in Hong Kong, who said that he was not aware of the Douyin IPO and had not heard of any relevant discussions internally.

At the end of 2019, the Trump administration attacked Byte's TikTok; in August 2020, the Trump administration required TikTok to sell or close its U.S. business by September 15, and then Byte had to contact a number of U.S. companies, including Microsoft, Oracle, Walmart, etc., to seek solutions to maximize profits.

A person familiar with the matter told Photon Planet that Zhang Yiming stayed in the United States for several months to find a solution, and many of these negotiations were almost arranged by Goldman Sachs, and the two sides also established a good relationship of trust in the process. The matter was finally reversed due to Trump's defeat.

Previously, the service byte was mainly goldman Sachs's U.S. team, but there were also a few Hong Kong teams, and Tsai Wei, global vice chairman of Goldman Sachs' investment banking department and co-head of China's investment banking business, was also personally involved in the matter. Once Douyin launches the IPO, the Cai Wei team may play an important role.

Correspondingly, underwriters who had previously participated in Kuaishou's IPO are expected to be excluded, and the co-sponsors of Kuaishou's IPO include Morgan Stanley, Bank of America Securities and China Renaissance Capital.

A senior practitioner analyzed that due to the direct competition between Kuaishou and Douyin, Morgan Stanley will not become the underwriter of douyin IPO, and the Chinese underwriters of Kuaishou have found Huaxing Capital, and Douyin is likely to choose CICC as a Chinese-funded securities company, of course, it does not exclude CITIC Construction Investment Securities.

A person familiar with the matter told Photon Planet that Zhang Yiming and his wife have private bank accounts in UBS and Credit Suisse, and many of their assets are entrusted to these two banks to help manage. Based on the previous cooperation, the two companies do not rule out that one of them may become a joint sponsor.

The old means of the new CFO

The addition of Byte's new CFO, Gao Zhun, is almost considered to be the real hammer of its upcoming IPO.

Previously a highly capable law firm partner, Gao Zhun has advised more than 100 companies on their listings and other capital market financing projects, covering almost all the major companies in China's technology Internet industry in the past decade.

"Everyone thinks that Zhou Shoufu, who came from Xiaomi as CFO and then became ceo of TikTok, is very powerful, but if you talk about IPO qualifications alone, it is ugly to say that Zhou Shengzi is not worthy of Gao Zhun's shoes. Weeks ago in the VC, and then also responsible for xiaomi this case, the experience is not much, but Gao Zhun and all the investment banks have been dealing with for many years, in the investment bank if there is something she can not do, then it should be difficult for someone to do. ”

According to Gao Zhun's past resume, she can complete almost all aspects of an IPO project, even the prospectus is mainly completed by her own team, and only in the final sale stage will the work be transferred to the underwriters. This also means that Douyin can be kept secret for a long time, until it is known to the outside world when it begins to raise funds officially.

An investment banker told Photon Planet that after Byte's new CFO Gao Zhun joined the company, many people familiar with her in the circle asked her whether Byte wanted to conduct an IPO, which was basically denied by Gao Zhun. "However, with what people in the industry know about her, the more she tries to hide something, the more likely she is to make substantive moves."

Due to the complexity of the current international environment, Zhang Yiming is also forced to think more flexibly. Specifically at the IPO business level, because TikTo is still facing too much regulatory uncertainty overseas, Zhang Yiming is likely to split off and list various business segments, package domestic businesses such as Douyin, Today's Headlines, Feishu, Watermelon Video, volcano engine and other domestic businesses to be listed in Hong Kong, and wait for the follow-up time to mature before considering TikTok's listing in the United States.

However, whether such an arrangement is finally made will have to wait until the disclosure of official information.