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U.S. Pension Funds Face Uncertainty Over Looming TikTok Ban
Over $9 billion from U.S. pensions, universities, and other groups are invested in ByteDance, TikTok's parent company from China.
9th May 2024
There's uncertainty as the U.S. wants ByteDance to sell TikTok to an American owner or face a ban. A report by Future Union says this battle affects USA investors' interests.
The report finds that 39 big U.S. public pensions invested in funds linked to ByteDance between 2012 and 2024. But, the real numbers might be higher because disclosure is unclear.
Big investors like the Washington State Investment Board and California's Public Employees Retirement System have billions tied up in ByteDance-linked funds.
Some dispute the report's claims. They say they have no direct investment in ByteDance.
Universities like the University of Michigan and the University of California also have big investments in ByteDance-linked funds through private equity firms.
Expert Insights on Investment Risks
Investing in Chinese companies like ByteDance mixes U.S. and Chinese interests, says Andrew King of Future Union.
He thinks U.S. investors should think twice about supporting Chinese startups. Returns on investments could be delayed because it's tough for Chinese companies to go public or get bought out.
Big investment firms like KKR and the Carlyle Group help U.S. investors put money into Chinese companies. KKR manages investments for public pensions, universities, and nonprofits linked to ByteDance.
Who is Invested in ByteDance?
Several public pension funds have indirect investments in ByteDance through private equity funds that participated in late-stage venture capital rounds in 2017 or 2018.
Here are some of the public pension funds and the private equity funds they're associated with:
Colorado Public Employees' Retirement Association: This association invested in TCV VIII during a late-stage venture capital round in 2018, indirectly linking them to ByteDance through their investment in the private equity fund.
Colorado Fire & Police Pension Association: Similarly, this pension association participated in the same late-stage venture capital round in 2018 through their investment in TCV VIII, connecting them indirectly to ByteDance.
Iowa Public Employees' Retirement System: They joined the late-stage venture capital round in 2018 by investing in TCV VIII, creating an indirect link to ByteDance through their investment in the private equity fund.
Los Angeles City Employees' Retirement System: This system's investment in TCV VIII during the 2018 late-stage venture capital round indirectly ties them to ByteDance.
Los Angeles Fire and Police Pension System: Similarly, their investment in TCV VIII during the 2018 late-stage venture capital round connects them indirectly to ByteDance.
Maine Public Employees Retirement System: They participated in the 2018 late-stage venture capital round by investing in TCV VIII, indirectly linking them to ByteDance.
Massachusetts Pension Reserves Investment Trust: Their investment in TCV VIII during the 2018 late-stage venture capital round indirectly connects them to ByteDance.
Nevada Public Employees Retirement System: Similar to others, their investment in TCV VIII during the 2018 late-stage venture capital round links them indirectly to ByteDance.
New Jersey Division of Investment: Their investment in TCV VIII during the 2018 late-stage venture capital round creates an indirect connection to ByteDance.
North Carolina Retirement Systems: Their participation in the 2018 late-stage venture capital round by investing in TCV VIII links them indirectly to ByteDance.
Santa Barbara County Employees Retirement System: Their investment in TCV VIII during the 2018 late-stage venture capital round indirectly ties them to ByteDance.
Teachers' Retirement System of Louisiana: Their investment in TCV VIII during the 2018 late-stage venture capital round creates an indirect link to ByteDance.
Texas County & District Retirement System: Their investment in TCV VIII during the 2018 late-stage venture capital round connects them indirectly to ByteDance.
Washington State Investment Board: Similarly, their investment in TCV VIII during the 2018 late-stage venture capital round indirectly ties them to ByteDance.
Hawaii Employees' Retirement System: Their investment in General Atlantic Investment Partners in 2017, which participated in the 2018 late-stage venture capital round, creates an indirect link to ByteDance.
New York State Common Retirement Fund: Their investment in LVC USD Fund III during the 2018 late-stage venture capital round indirectly connects them to ByteDance.
California State Teachers' Retirement System: Their investment in GGV Capital V during the 2017 late-stage venture capital round creates an indirect link to ByteDance.
Los Angeles County Employees' Retirement Association: Similarly, their investment in GGV Capital V during the 2017 late-stage venture capital round indirectly ties them to ByteDance.
Oregon Public Employees Retirement System: Their investment in GGV Capital V during the 2017 late-stage venture capital round links them indirectly to ByteDance.
University of California Retirement System (Regents of UC): Their investment in GGV Capital V during the 2017 late-stage venture capital round creates an indirect connection to ByteDance.
Virginia Retirement System: Their investment in Virginia Retirement System General Atlantic Separate Account during the 2017 late-stage venture capital round indirectly ties them to ByteDance.
TikTok Has Sued the U.S. Government over Looming Ban
TikTok and its parent company ByteDance on Tuesday filed a lawsuit against the U.S. government in the U.S.
Court of Appeals for the District of Columbia Circuit. This lawsuit challenges a new law that requires ByteDance to sell TikTok’s American operations or face a nationwide ban on the social media app.
The lawsuit argues that the law, known as the Protecting Americans from Foreign Adversaries Act, violates the First Amendment rights of TikTok’s 102 million users in the United States.
TikTok and ByteDance claimed that forcing the sale of the app's U.S. business or shutting it down infringes on users' freedom of speech and expression.
National Security Concerns and Lack of Evidence
TikTok and ByteDance argued that the government hasn't provided concrete evidence of any genuine national security threat posed by TikTok.
They claimed the law is overly broad and lacks clear guidelines for compliance.
Additionally, ByteDance contends that finding a buyer for TikTok’s U.S. operations and obtaining approval from the Chinese government could be nearly impossible.