Baidu to sell its majority stake in its financial services arm for $1.9 B
China’s leading language Internet search provider Baidu Inc. is selling its majority stake in its newly spun-off financial services division for $1.9 billion. The Financial Services Group (FSG), as it’s called, received investment from TPG and the Carlyle Group, with participation from others such as ABC International Holdings, Taikang Group, and others. The FSG provides credit to the consumer, helps with wealth management, and other services.
Reuters reported that the deal which is expected to close in the second half of this year values FSG at nearly $4 billion.
The investment will allow Baidu to try and bridge the gap that its Chinese rivals Alibaba Group Holdings and Tencent Holdings Ltd hold in the financial services sector. It will also help the tech firm explore revenue streams outside its internet search business.
Baidu has been pushing into new innovative markets like self-driving car technology and has recently joined hands with BlackBerry too.
In a statement, Baidu has shared that it will divest a majority equity stake in FSG, which has now been renamed Du Xiaoman Financial or Du Xiaoman. “Through the transaction, Du Xiaoman will raise approximately US$1.9 billion, among which Du Xiaoman will receive $840 million, with the remaining balance used to purchase the existing stake.”
Once the transaction is complete, Baidu will no longer have effective control over Du Xiaoman and will own approximately 42 percent of the new company’s shares. The firm will also work independently, with Guang Zhu as CEO of Du Xiaoman. Guang is also a Baidu Senior Vice President and General Manager of FSG.
“In the coming age of FinTech, Du Xiaoman will leverage the technological capabilities of Baidu AI to partner with financial institutions and provide technology-driven, trustworthy financial services to consumers in China,” said Guang in a statement.
Robin Li, Chairman and CEO of Baidu, also spoke about how this new milestone would allow the company to be a player in the fintech space. He said, “I’m pleased to see the rapid growth Du Xiaoman has experienced since its inception in December 2015, to become a leading player in the FinTech space through innovation powered by AI. This transaction marks another milestone for Baidu to incubate new businesses with large opportunities and strong synergies with Baidu’s core business, on the heels of iQiyi’s public listing.”
