Baidu to sell $1.9 billion stake in financial services unit

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The Baidu logo outside its headquarters in Beijing. Photo: Reuters / Jason Lee

Let the battle commence. The fintech ecosystem is starting to become ultra competitive with the news that Baidu is selling a majority stake in its financial services business for US$1.9 billion to a consortium led by TPG Capital and the Carlyle Group.

The move comes as the Beijing-based technology company, which specializes in internet-related services, products and artificial intelligence, seeks funding to take on established fintech firms in China.

Indeed, this cash injection will give Baidu the boost it needs to narrow the gap with high-tech behemoths Alibaba and Tencent in the online financial services sector.

The deal also comes at a time when China’s government is tightening regulations on the loans market to rein in shadow banking and push lenders to cut excessive debt.

Baidu’s Financial Services Group, or Baidu FSG, runs payment system Baidu Wallet, an online credit service and an online wealth management platform.

“This transaction marks another milestone for Baidu to incubate new businesses,” Robin Li, the chairman and CEO of Baidu, said in a statement, which was reported by TechCrunch, a US technology industry news website.

Baidu’s Financial Services Group, or Baidu FSG, runs payment system Baidu Wallet, an online credit service and an online wealth management platform.

Baidu will be left with a roughly 42% of the operation, renamed Du Xiaoman Financial, which will operate independently. The rest of Du Xiaoman will be owned by the consortium, which also includes Taikang Group and ABC International, Baidu stated.

Guang Zhu, a senior vice-president at Baidu and general manager of the financial services business, will become CEO of Du Xiaoman, Baidu said in a statement.

“In the coming age of fintech, Du Xiaoman will leverage the technological capabilities of Baidu AI [artificial intelligence] to partner with financial institutions and provide technology-driven, trustworthy financial services to consumers in China,” Zhu said.

– with reporting from Reuters

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