China’s Baidu seeks new investors for finance unit in up to $2b deal

A woman is silhouetted against the Baidu logo at a new product launch from Baidu, in Shanghai, China, November 26, 2015. REUTERS/Aly Song/File Photo

Chinese search engine Baidu Inc is seeking new investors for its wholly-owned finance unit, in a deal that could fetch up to $2 billion and deepen its push into financial services, people with knowledge of the matter said.

The investors will either buy some of Baidu’s shares in Baidu Financial Services Group (Baidu FSG) or buy new stakes in the unit, which is valued at around 18 billion yuan ($2.8 billion) before the new funding round, the people told Reuters.

Baidu Inc is currently talking to prospective investors with the aim of attracting between $1.5 billion and $2 billion, they said. About half of the proceeds will be raised by Baidu through selling down its holdings in the unit, they said. The fundraising is expected to close by April, one person said.

Baidu FSG runs payment system Baidu Wallet, an online credit service and an online wealth management platform. By beefing it up, Baidu is attempting to narrow the lead that its Chinese rivals Alibaba Group and Tencent Holdings have forged in financial services.

The fundraising also comes amid a wider reshuffle of Baidu’s corporate strategy as it looks for new revenue streams outside its core search business.

Baidu Inc declined to comment on the fundraising. All the people declined to be named as the fundraising plans were confidential.

Currently, Baidu FSG mainly offers online financial services and products in China and owns several small financial licenses such as a third-party payment licence and a fund sales licence.

Alibaba affiliate Ant Financial, which was valued at over $60 billion in its latest funding round in 2016, runs China’s top online payment platform Alipay and offers services including online payment, wealth management products and insurance.

Its main rival Tencent operates WeChat Pay, a payment feature which is attached to its popular messaging and social networking application WeChat and has several hundred million users.

Baidu Wallet, which also attracts users for other financial services such as online credit, had 100 million activated accounts as at the end of 2016. It is currently far behind its rivals Ant Financial and WeChat Pay in mobile payments in China.

Baidu FSG plans to use part of the proceeds to be raised to invest in several domestic financial institutions, such as trust firms. It is expected to record 3 billion yuan to 4 billion in net revenue and turn a slight profit this year, one of the people said.

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Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.