Early backers of the AI start-up Manus are preparing to buy the company back from Meta at the same $2 billion that the Facebook parent originally paid, following an April order from the Chinese government requiring the acquisition to be unwound.

HSG, ZhenFund, Tencent and several other early Manus investors are taking part in the buyback, according to people familiar with the matter. HSG and ZhenFund are each considering deploying fresh capital to fund their share of the transaction, the reports said.

The move would return one of the most closely watched AI agent companies of the past two years to the control of the investors who backed it before Meta stepped in, and it would do so at the same valuation struck in the December deal rather than at a premium reflecting the company's rapid growth since.

A $2 billion round trip

Meta's acquisition of Manus was completed in December and was widely read as an attempt by the social media group to buy its way into the emerging market for autonomous AI agents — software that can plan, browse, execute multi-step tasks and operate tools on a user's behalf rather than simply answering questions.

That strategy was upended in April, when Chinese authorities ordered Meta to unwind the transaction. The order placed the deal alongside a growing list of cross-border technology transactions that have been slowed, restructured or reversed as Beijing and Washington tighten scrutiny of artificial intelligence assets, data flows and talent.

The unwind is unusual in its mechanics. Rather than a distressed sale or a write-down, the plan under discussion returns the asset to its original owners at the original price, effectively treating the acquisition as a transaction that must be reversed rather than repriced.

Who is behind the buyback

The investor group assembling the repurchase is drawn largely from Manus's earliest financial backers. HSG, a venture firm with deep roots in China and Southeast Asia, and ZhenFund, one of the country's best-known seed-stage investors, are both participating. Tencent, the Shenzhen-based internet group, is also involved, alongside other existing holders.

The participation of Tencent is notable given its own extensive portfolio of AI investments and its interest in agentic products that can be distributed across messaging and enterprise software. For HSG and ZhenFund, funding the buyback with new capital would represent a significant recommitment to a company whose value has, by revenue measures, multiplied several times over in less than a year.

Not every early backer is joining. Benchmark, the US venture firm that was among Manus's earliest investors, is reportedly not taking part in the repurchase — a decision that reflects both the complexity of cross-border ownership in AI and the differing risk appetites of US and Asian investors when a Chinese regulatory order is in play.

The investor line-up

• HSG — participating in the buyback; considering the use of fresh capital
• ZhenFund — participating; also weighing new capital for its share
• Tencent — among the early investors involved in the repurchase
• Benchmark — reportedly not participating
• Other early holders — also part of the buying group

Revenue has surged since the deal

The case for buying back in is straightforward. At the time of the December acquisition, Manus was generating an annualised revenue run rate of roughly $100 million. That figure has since risen to between $400 million and $500 million, according to the reports — a four- to five-fold increase in a matter of months.

That trajectory is rare in enterprise AI, where many well-funded start-ups have struggled to convert viral adoption into recurring subscription revenue. Manus built its reputation on a general-purpose agent that could be given an open-ended instruction and left to complete it, a category that has attracted intense interest from both consumers and businesses looking to automate desk-based workflows.

The growth also explains why the original investors are willing to reassemble the company rather than let it be sold to another buyer. Buying back at the December price effectively captures the revenue expansion of the intervening period without paying for it.

A China joint venture and a Hong Kong listing path

Manus was founded by a Chinese team and is now headquartered in Singapore, a structure that was designed to give it access to global markets while retaining its engineering base. That structure is now under review.

According to the reports, Manus is considering reorganising itself into a joint venture incorporated in China. Such a structure could satisfy domestic regulatory expectations around ownership and control of advanced AI technology, and it could also open a path to a listing in Hong Kong.

A Hong Kong listing would place Manus in the company of a small but expanding cohort of Chinese AI companies that have chosen the city over New York. Zhipu and MiniMax have both found success with Hong Kong offerings in recent months, drawing strong demand from mainland and international investors eager for exposure to Chinese AI models and applications.

For Manus, a Hong Kong listing would offer several advantages: proximity to its engineering talent and to mainland investors, a regulatory environment that understands variable interest entity structures, and a market that has recently demonstrated appetite for AI names. It would also simplify the cap table at a moment when clarity of ownership is essential.

Operational separation is already complete

The unwinding process is further along than the buyback negotiations might suggest. Meta has already completed its operational separation from Manus and has halted data-sharing with the start-up, according to reports this week.

Operational separation is typically the most technically demanding part of unwinding an acquisition of a software company. It involves disentangling shared infrastructure, separating codebases and repositories, revoking credentials, migrating customer data, and closing off the internal communications and analytics pipelines that connect an acquired team to its parent.

Halting data-sharing is equally consequential. For a company whose product depends on large-scale model training and inference, the flow of data between the parent and the acquired entity is often the connective tissue of the entire integration. Cutting it is a precondition for any regulator-approved divorce.

Meta's internal AI ambitions

The unwind also disrupts plans inside Meta. The company had reportedly been preparing to use Manus-like agent technology in an internal initiative aimed at deploying AI to replace human workers across parts of its operations — one of the more aggressive automation programmes contemplated by a major technology company.

Those plans now appear unsettled. Emily Dalton Smith, a key executive involved in applying Manus-like technology to Meta's internal AI agents, told staff in an internal memo earlier this week that she intended to leave the company.

The combination of a mandated separation and the departure of the executive most closely associated with the integration leaves Meta without the asset and without the internal champion who was meant to operationalise it. The company has not indicated publicly how it intends to fill that gap, whether through an alternative vendor, an in-house build, or a different acquisition.

Why the Manus case matters

The episode is becoming a template for how AI deals involving Chinese-founded companies may be treated going forward. It demonstrates that a completed acquisition is not necessarily final, that regulatory orders can reach backwards into closed transactions, and that the commercial logic of a deal — however compelling — can be overridden by national security and technology sovereignty considerations.

It also illustrates the value of the dual structure that many Chinese-founded AI start-ups have adopted: a Singapore or other offshore holding company paired with a mainland engineering base. That arrangement provided Manus with global reach, and it is now providing a blueprint for a restructuring that could satisfy domestic requirements while preserving access to international capital markets.

For the investors, the calculus is unusual. They are being asked to fund the repurchase of an asset they once sold, at the price they sold it for, in a company that now generates four to five times the revenue it did at the time of the sale. The regulatory constraint that forced the sale is the same constraint that now makes the repurchase possible on those terms.

Benchmark's decision to stay out of the buyback underscores that the transaction remains contested terrain, with different investors reaching different conclusions about the risks of holding a company at the centre of a US-China technology dispute. The remaining participants are effectively betting that a China-incorporated joint venture, a Hong Kong listing and a fast-growing revenue base will prove more durable than the original offshore structure.

Meanwhile, the precedent set by Zhipu and MiniMax — both of which have drawn investor demand through Hong Kong listings in recent months — suggests that a public market exit is available to Chinese AI companies that structure themselves appropriately, even as US listings remain effectively closed to many of them.

Source:Silicon UK News