Susquehanna International Group, one of ByteDance Ltd.’s earliest and largest backers, is looking to sell about $500 million of its shares in the TikTok owner, seeking to diversify its portfolio during China’s tech crackdown and profit from the startup’s growth.

The U.S. investment firm sought to sell the stake at a price that valued ByteDance north of $400 billion, but it was unsuccessful and has since lowered the offer, according to people familiar with the matter. Another shareholder in ByteDance recently sold equity at a valuation of between $360 billion and $370 billion, said one of the people, asking to not be identified discussing private information.

Representatives with Susquehanna and its China division declined to comment, while a ByteDance spokesperson didn’t respond to requests for comment.

A hit factory for apps like TikTok and news aggregator Toutiao, ByteDance has emerged as the world’s most valuable startup. While its potential initial public offering has set off fervent speculation for at least a year, the Beijing company has repeatedly said it’s not ready for such a debut. Meanwhile, intensifying scrutiny in China over the country’s internet giants — especially those with influence over algorithms, data security and public opinion — has raised new risks for the future of its business.

That fueled a string of ByteDance trades in private markets over the past months, with one dealer telling Bloomberg in August the valuation has dropped to about $450 billion from as much as $500 billion in July. The company’s valuation was last listed at $140 billion, according to market researcher CB Insights, compared with $100.3 billion for the No. 2 SpaceX.

Pennsylvania-based Susquehanna’s sale will represent a small portion of its overall ByteDance holdings, which is set to deliver one of the highest returns in the history of venture capital investment. The initial bet was made at the start of 2012, when Toutiao — ByteDance’s first breakout hit — was just a concept that founder Zhang Yiming had drawn up on napkins, according to a 2016 blog post by Joan Wang, who led that investment for Susquehanna’s Chinese venture-capital unit. Susquehanna was ByteDance’s largest outside backer with a 15% stake, according to a Wall Street Journal story in October 2020.

ByteDance had kicked off initial preparations for public listing of its domestic assets, Bloomberg News reported in April. Since then, regulatory changes in China meant Zhang’s company has had to proceed cautiously, even before the IPO of Didi Global Inc. in New York sparked a backlash in Beijing.

ByteDance executives have attended regular meetings with Beijing’s regulators to work on issues such as data security. The country’s internet watchdog now requires any company with more than 1 million users to seek its approval before listing abroad.

China launched a sweeping crackdown on its giant private sector a year ago, exerting control over everything from e-commerce to ride-hailing and online entertainment. While ByteDance — unlike peers such as Alibaba Group Holding Ltd. or Meituan — hasn’t become the target of any official probe, new rules in sensitive areas like algorithm recommendations, news gathering and online lending may become obstacles to growth.

The government quietly appointed a director to the board of ByteDance’s key domestic subsidiary several months ago — an unusual arrangement that offers Beijing more sway and insight into the company. In May, billionaire founder Zhang made a surprise move to step down as ByteDance’s chief executive officer instead focusing on longer-term strategy.

The company is in search of its next blockbuster app after Toutiao and TikTok, along with its Chinese video service Douyin. The internet titan has ventured into new arenas from e-commerce to mobile gaming and virtual reality, with mixed success. In August, ByteDance laid off hundreds of employees at its online education arm after Beijing banned for-profit tutoring on school subjects.

For 2020, ByteDance earned a gross profit of $19 billion on revenue of $34.3 billion, which more than doubled, the firm said in a staff memo in June. Then it swung to an operating loss of $2.1 billion last year after issuing more shares to employees.

One of the first Chinese internet services to become a global hit, TikTok managed to grow in the U.S. despite facing a potential ban under former President Donald Trump. In June, President Joe Biden decided to not to pursue the Trump-era ban.

Last month, the video-sharing platform reached 1 billion monthly users worldwide, adding 300 million users in a year.

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