Shanghai stock exchange-listed Chinese mobile reading firm IReader Technology is raising up to 700 million yuan ($100 million) from search giant Baidu through a private placement process.
Beijing-based IReader entered into an agreement with Bairuixiang Venture Investment Management, a wholly-owned subsidiary of Baidu, on March 17 to sell over 38.67 million shares at a price of 18.10 yuan ($2.58) apiece, IReader revealed in filings with the board on Wednesday.
The shares account for an 8.8 per cent stake in IReader with a lock-up period of two years, according to the filings.
As part of the agreement, IReader will license the intellectual property (IP) of its digital content to Baidu, while Baidu agreed to provide IReader with priority support in internet search, purchase and development of new content, commercialization, AI, big data, software and mobile app development. The duo will also join efforts in the areas of online education and intelligent hardware development.
The strategic investment can “further lift the overall competitiveness” of IReader by helping the firm strengthen its main business of mobile reading solutions, expand new product lines, and enhance its management capability, said the company.
Established in September 2008, IReader operates as a mobile reading distribution platform that delivers digital content, e-reading apps, and other value-added services to more than 150 countries and regions worldwide. Claimed to have about 110 million monthly active users (MAUs), the company expanded into the international market in 2015 and has so far authorised over 100 original works to overseas partners.
IReader closed almost $100 million in its initial funding round led by Chinese internet-focused investment firm Guojin Capital, and the country’s animation and toy developer Alpha Group in January 2016. In September 2017, the company raised 166 million yuan ($24 million) in an initial public offering (IPO) on the SSE.
The deal represents Baidu’s latest effort to improve its business layout in the Chinese online content distribution field. The search engine giant joined hands with the Chinese video-sharing app Kuaishou in August 2019 to invest $434 million in Zhihu, a Chinese question-and-answer website like Quora.
The company also picked up shares in Shanghai Seven-Cat Culture Media, the operator of free online reading app Seven-Cat, for an undisclosed amount in July 2019.
In December 2013, Baidu acquired the online reading platform Zongheng from Beijing-based video game developer Perfect World Games for almost 192 million yuan ($27 million). Perfect World Games bought back the company in June 2016 for 1 billion yuan ($142 million).
Baidu has reached a revenue of 107.41 billion yuan ($15.30 billion) and nearly 2.06 billion yuan ($293 million) in the net profit attributable to shareholders in 2019, shows its latest financial results.