The overseas operations of social media giant ByteDance, owner of hit short video platforms TikTok and Douyin, are expected to receive a boost from its reported plan to borrow US$9.5 billion from banks.

That loan would represent the biggest dollar-denominated corporate facility in Asia, excluding Japan, according to separate reports earlier this week by Bloomberg and Reuters, both of which cited sources familiar with the matter.

ByteDance needs some of the proceeds from the US dollar-denominated loan for its overseas businesses, according to Li Chengdong, founder and chief analyst at Beijing-based consultancy Dolphin.

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The company's overseas e-commerce operation, for example, is still in an "input phase" that requires hundreds of millions of dollars to build up its ecosystem, Li said. The loan can also help "maintain [good] connection with the banks", he added.

ByteDance's overseas e-commerce business, TikTok Shop, was initially rolled out in the UK and Indonesia in 2021. Photo: Shutterstock alt=ByteDance's overseas e-commerce business, TikTok Shop, was initially rolled out in the UK and Indonesia in 2021. Photo: Shutterstock>

"It is also common practice for Chinese tech giants, including the likes of Tencent Holdings and JD.com, to issue bonds overseas because foreign currency exchange can be difficult," Li said.

Citigroup, Goldman Sachs and JPMorgan are the coordinators of the latest financing, which carries a tenor of three years and can be extended to a maturity of up to five years, the Bloomberg report said. The proceeds will be partly used to refinance a US$5 billion dual-tranche facility the group had raised in 2021 and for working-capital purposes, according to the report.

ByteDance declined to comment.

While ByteDance is keeping details close to the chest, the size of the loan has triggered speculation that the resources could be used to help drive the company's efforts in artificial intelligence (AI), e-commerce and other new businesses.

The company has plans to expand its e-commerce operations into Mexico, France, Germany, Italy and Spain, according to a South China Morning Post report in May that cited people familiar with the matter.

TikTok Shop was initially rolled out in the United Kingdom and Indonesia in 2021, followed by five more countries in Southeast Asia in 2022. TikTok's online marketplace feature was introduced in the United States in September last year.

ByteDance-owned video-editing app CapCut, which has generative artificial intelligence features, has been widely adopted by TikTok, Douyin and Instagram users. Photo: Shutterstock alt=ByteDance-owned video-editing app CapCut, which has generative artificial intelligence features, has been widely adopted by TikTok, Douyin and Instagram users. Photo: Shutterstock>

ByteDance's e-commerce foray in the US, however, has had lower-than-expected results. TikTok Shop's average daily gross merchandise volume in the US reached US$20 million in the first half of this year, which was way behind the company's target of US$45 million for 2024, amid competition from Temu and Shein, Chinese media LatePost reported last month.

In July, ByteDance-owned TikTok was said to be exploring the local services sector in Indonesia and Thailand, according to a report by Chinese media outlet 36Kr.

Meanwhile, ByteDance's CapCut and Doubao led global AI app downloads in July, according to industry research firm Unique Capital, in a sign that the Chinese tech unicorn's generative AI push is paying off.

With no immediate plans to go public, ByteDance has been offering to buy back shares from early investors on an irregular basis. In December last year, it offered a buy-back of US$5 billion worth of shares from early investors.

Reports about ByteDance's bank loan came shortly after news that Philippe Laffont, founder of New York-based Coatue Management, exited the Chinese firm's board and was replaced by French businessman Xavier Niel.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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