ByteDance’s $50bn TikTok Global

China’s ByteDance said on Monday that TikTok’s global business will become its subsidiary. ByteDance said on Monday that it will own 80% of TikTok Global, a newly created U.S. company that will own most of the app’s operations worldwide. Oracle and Walmart, which have agreed to take stakes in TikTok Global of 12.5% and 7.5% respectively, had said on Saturday that majority ownership of TikTok would be in American hands. — The Edge (Link)

Yeap, TikTok will be in American hands. US investors own about 41% of ByteDance, who in turn will own 80% of TikTok Global. The other 20% will be owned by Oracle and Walmart. This means that 53% of TikTok Global will be owned by US investors, with 33% coming from ByteDance’s US investors and 20% from Orcale and Walmart. Trump got what he wanted and I have no doubt he will be bragging about this in his election campaign. TikTok Global is valued at $50bn presenting an enormous market for investors and it is looking to go public in a years time.

I am generally excited about the listing, and not the deal. There are a couple of reasons why I believe the deal will go through assuming certain things. One, Zhang Yiming, the founder of ByteDance, will have more voting power in the board of TikTok Global. We have seen the trend of tech companies offering different class of shares to investors with different voting powers. This is what its called the Class A and B (dual class, for more info, go to this link) shares in the industry. Typically, the company will issue both A and B shares with A shares having higher voting powers in the board. This is used by numerous tech company founders to offer more shares to the public without relinquishing control of the company. Facebook famously have this structure with Zuckerberg still holding control of the company. I am predicting that Zhang Yiming is eyeing to list in the US market since TikTok Global is incorporated in the US, and offer dual class of shares where he will then hold the majority voting power in the board of TikTok Global.

Two, the inclusion of Oracle and Walmart will provide avenues for monetisation for TikTok. The reach of TikTok is massive with presence in 150 countries and 800 million active users (Link). However, I do think monetising TikTok will probably have to go down the path of Instagram where monetisation is primarily done with affiliates, and selling products. 

Bintai Kinden’s Covid-19 Vaccine

Bintai Kinden Corp Bhd has entered into a licensing agreement with US-based firm Generex Biotechnology Corp for Covid-19 vaccine compounds in Malaysia. According to a bourse filing today, Bintai Kinden, Generex and the latter’s wholly-owned subsidiary NuGenerex Immuno-Oncology entered into a heads of agreement (HOA) on Friday. Bintai Kinden will hold the exclusive licence in Malaysia when it comes to the commercialization and development of compounds and research information in the country when it comes to a Covid-19 vaccine. — The Edge (Link)

I have previously commented on Bintai Kinden’s share price increase in 26 Aug 2020 in my post here. I did not think its share price increase was justified then, and it subsequently declined from RM0.72 (28 Aug 2020) at its peak to RM0.40 (10 Sep 2020). It has recently again trended upwards to RM0.64 today as investors speculate on the partnership between Bintai and Generex. 

To recap, Bintai entered into a MoU with Generex Biotechnology Corp, to fund and manage a synthetic peptide vaccine for Covid-19 in Malaysia back in Aug 2020. Bintai will now be working towards signing a licensing agreement with Generex, to distribute Generex’s Covid-19 vaccine exclusively in Malaysia. My argument is still the same as last time, how likely will Generex be able to produce a vaccine at this stage? The shareholders call at the end of Aug 2020 for Generex indicated that the FDA has green-lighted Generex for the development of the Covid-19 vaccine in the pre-IND stage. What Generex has to do now is to develop the vaccine and conduct clinical trials. 

My point remains the same, it remains the be seen whether Generex could produce a potent Covid-19 vaccine. At this stage, I am seeing the speculation again in regards to Bintai Kinden’s share price.