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ByteDance exits Josh parent at 56% discount ahead of re-entry into India market

ByteDance received $102.67 million for its entire investment. Considering VerSe Innovation’s $805-million primary fundraise in April, which it raised at a valuation of $5 billion, ByteDance should have received about $232 million for its investment.

June 03, 2022 / 09:17 PM IST
Umang Bedi (left) and Virendra Gupta of VerSe Innovation

Umang Bedi (left) and Virendra Gupta of VerSe Innovation


ByteDance, the parent company of short video platform TikTok, has fully exited its investment in VerSe Innovation, which runs short video platform Josh and news aggregator DailyHunt, at a whopping 56 percent discount as it plans to re-enter India two years after the government banned TikTok citing security concerns.

ByteDance has sold 139,774 shares to Ontario Teachers Pension Plan (OTPP) and 162,750 shares to Canada Pension Plan Investment Board (CPPIB), according to the company’s latest filings with the Ministry of Corporate Affairs (MCA), accessed by Moneycontrol.

According to Moneycontrol’s calculations, ByteDance received $102.67 million for the 302,524 shares it sold. Considering VerSe Innovation’s $805-million primary fundraise in April, which it raised at a valuation of $5 billion, ByteDance should have received about $232 million for its 302,524 shares.

ALSO READ: Dailyhunt parent VerSe Innovation raises a record $805 million at a valuation of $5 billion

The secondary share sale was a part of VerSe Innovation’s extended Series J round, which started earlier this year. VerSe Innovation did not respond immediately to a query. Emails sent to ByteDance, CPPIB and OTPP, too remained unanswered.

ByteDance’s exit comes at a time when the company was reportedly planning to re-enter one of the world’s biggest internet markets, India, which was also a very large market for TikTok before the government banned the app in India in April 2020. The Indian government had also restricted investments from countries that share a border with India.

According to recent media reports, ByteDance is said to be in talks with Hiranandani Group, which runs the data centres company Yotta Infrastructure Solutions. The company has also informed government informally about its re-entry plans.

A media report by news agency Inc42 said that Yotta’s data centre in Navi Mumbai, which has a capacity of 7,000 racks and is the largest in Asia and the second-largest in the world, will allow ByteDance the to store Indian user data in India, making it compliant with local regulations.

Competition for short video applications is fast rising in India, after the government banned TikTok in 2020. Many local companies tried filling in for the void created by TikTok. However, since Meta Platforms, which runs Instagram, launched ‘Reels’ in 2020, local companies including Josh, Moj, MX TakaTak and Chingari have struggled. Alphabet’s YouTube also recently made forays into the short video platform space with YouTube Shorts.

Earlier this year, Mohalla Tech, which runs Moj, acquired MX TakaTak for $600 million, triggering consolidation in the short video space, thus making it more challenging for other local players such as Josh and Chingari. Moj and TakaTak, together, will have a user base of 400 million.

In a recent interaction with Moneycontrol, Umang Bedi and Virendra Gupta, co-founders of VerSe Innovation had told Moneycontrol that the firm will look to monetise Josh from April.

Meanwhile, Mohalla Tech, which also runs social media platform ShareChat, is said to be in talks to raise $300 million at a valuation of $5 billion.
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Nikhil Patwardhan
Chandra R Srikanth is Editor- Tech, Startups, and New Economy