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NYPD, FDNY, teachers and NYC worker pension funds have millions sunk in TikTok parent ByteDance

WASHINGTON – Millions of {dollars} from US pension funds – together with these of New York’s law enforcement officials and firefighters – are invested in ByteDance, the Chinese-controlled parent firm of TikTok that’s beneath a standing order from Congress to dump the favored social media platform or face its banning.

The non-profit investment-watchdog group Future Union has recognized 48 pension funds that have entrusted their cash with enterprise capital and personal fairness companies recognized to have invested in ByteDance since 2012, in keeping with a brand new report obtained by The Post Tuesday.

Six of the most important are instantly tied to New York, together with the state’s widespread retirement fund and instructor’s retirement system, in addition to New York City’s workers’ retirement system, police pension fund and teachers’ retirement system.

Top US pension funds investing in TikTok owner ByteDance.
Top US pension funds investing in TikTok proprietor ByteDance, as seen in the Future Union report. Future Union
Top US pension funds investing in TikTok owner ByteDance.
Top US pension funds investing in TikTok proprietor ByteDance, as seen in the Future Union report. Future Union

Future Union was unable to trace down precisely how a lot cash was instantly invested into ByteDance as a result of its proprietary knowledge “is not required to be publicly provided by the pensions funds.”

However, it confirmed that no less than a few of the investments went to ByteDance by assessing the funding companies dealing with their cash.

“Future Union devised a [system] based on the amount of capital committed to known investors in ByteDance, combining the proprietary data on institutional investors with the timeline of ByteDance investments to report rank-order and show the magnitude of capital commitments,” nonprofit founder and enterprise capitalist Andrew King advised The Post.

The report additionally discovered that a few of the most notable American nonprofits and foundations have used funding funds that place their cash in ByteDance, together with the Mayo Clinic, the Bush Foundation, the Rockefeller Foundation and the Carnegie Corporation of New York.

TikTok headquarters
A view reveals the workplace of TikTok after the U.S. House of Representatives overwhelmingly handed a invoice that might give TikTok’s Chinese proprietor ByteDance about six months to divest the U.S. belongings of the short-video app or face a ban, in Culver City, California, March 13, 2024. REUTERS

As America’s largest supply of personal funding {dollars}, the capital allocators – the pensions, endowments and foundations – make up the lion’s share of supply funding for enterprise capitalists and personal fairness companies.

“Commitments by US public pension funds to venture and private equity funds that are known investors in ByteDance reached $8.1 billion, while US university endowments’ past commitments were $1 billion,” defined King, who advises the House Select Committee on the Chinese Communist Party and beforehand labored as an funding analyst and lawyer.

US nonprofit and foundations general have made greater than 620 commitments to Chinese and China-related enterprise capital and personal fairness funds, together with a few of the strongest gamers in the sphere similar to Sequoia Capital, Hillhouse Capital and Qiming Venture Partners, in keeping with the report.

Ties to China

President Biden final month signed into regulation a invoice that can pressure ByteDance to divest from TikTok after each Republicans and Democrats in Congress raised issues in regards to the social media platform’s monitoring and reporting of its American customers’ knowledge to the Chinese Communist Party – the US’ high adversary.

Beijing, by means of its state-run Internet Investment Fund, owns about 1% of TikTok shares, “illustrating the nearly indecipherable nature of the state and private sector companies in China,” in keeping with the report.

Under Chinese regulation, the funding grants the federal government entry to the social media platform’s knowledge collected from its customers, making a nationwide safety danger for the US that led to the TikTok laws’s passage.

A police car parked in front of the NYPD Times Square sub-station in New York City on April 26, 2020.
The New York City Police Pension Fund is among the many high US pension funds consider to have invested in ByteDance. Christopher Sadowski

“TikTok’s rise owes itself to the dozens of venture capitalist firms investing hundreds of millions, if not billions, of dollars from university endowments and US public pension funds into the Chinese company that Congress has forced to sell off the social media platform,” stated King.

Experts additionally consider Beijing is utilizing the app – which isn’t accessible in China – to affect US opinions in its favor, geopolitical advisor and former US Ambassador-at-Large for Global Women’s Issues Kellie Currie advised The Post.

“ByteDance is not a normal tech company and TikTok is not a normal social media app. It should be clear to anyone paying attention that TikTok is an enormously successful Chinese influence operation,” she stated. “It has succeeded beyond the CCP’s wildest imagination in advancing both direct CCP agendas as well as indirect influence operations that weaponize polarized issues.”

Risk

Aside from the ethical quandary of investing in an organization that presents nationwide safety dangers to the US, the funding companies have now endangered their purchasers’ funds by tying them to an organization which will quickly be compelled to surrender its US operations.

“Many of our most powerful and prominent pension funds, university endowments and nonprofits/foundations have subsequently been involved in, and now may remain to subject to, a geopolitical risk premium in private market investing,” the report stated.

Map of United States indicating the largest public pension funds investing in ByteDance, the owner of TikTok
Future Union

That danger has at all times existed however was “long ignored,” in keeping with Future Union, however is now unavoidable for the reason that TikTok laws handed, “resulting in vastly reduced exit opportunities for Chinese companies like ByteDance.”

“As investors, we’re all capitalists here and the goal is to make money. Yet we can no longer make investments that directly imperil the long-term success of our free market system,” King advised The Post. “As TikTok shows, the investment choices that venture capitalists and private equity investors made today, at the earliest stage and in the most critical technologies, have ramifications that reverberate for years.”

Future Union, which has produced two different studies on US investments in Chinese opponents, added that the ByteDance investments are a part of a troubling pattern of American companies risking monetary and nationwide safety in change for the opportunity of large short-term returns from the Asian market.

“This highlights a general trend that, despite the geopolitical tensions, US fund managers continue investing in the startups they view as leading in technology advancement and capable of generating higher returns – even if it means ignoring the long-term implications of supporting an adversarial ecosystem,” the report stated.

A sign on a stone base for New York State Teacher's Retirement System
The New York State Teacher’s Retirement System has been linked to investments in ByteDance. Google maps

Still, Currie stated that “nobody should feel the least bit sorry for (US investors in ByteDance) if they lose money,” for the reason that skilled funding and VC companies both have been or ought to have been conscious of the related risks.

“Every investment carries risk, and this one more so than most,” she stated. “These are very sophisticated investors … [who] knew or should have known the risks they were taking by investing in a Chinese company that has been marked with major political, regulatory and operational problems from day one.”

While the US funding is necessary, that’s not the one profit reaped by Chinese firms.

Because enterprise capitalists are required to take advantage of cash potential for his or her purchasers, in addition they supply “intangible relationship elements and knowledge that is far more impactful – and dangerous – if transferred to an adversary like China,” King stated.

“Venture capitalists are a conduit, and if they invest in Chinese startups, their duty to prioritize returns requires them to help these startups, and thus China,” he stated. “In doing so, they offer China the nearly priceless value of some of a lifetime of experience and learnings from … expertise in business best practices and the networks developed over a career touching the smartest founders, wealthiest investors, and most politically connected powerbrokers.

“This is an invisible threat worse than mere capital.”

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