Internet services giant Baidu to divest financial services business
Category: #world  By Paroma Bhattacharya  Date: 2018-04-30
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Internet services giant Baidu to divest financial services business

Baidu Inc., one of the leaders in the China market for internet services and products, has announced that it has entered into a deal to divest its financial services business. The investor consortium would be led by TPG and the Carlyle Group. Other participants include ABC International Holdings and Taikang Group among others.

The divestiture will give Baidu the hoist it requires to bridge the gap it has with rivals like Tencent Holdings Ltd. and Alibaba Group Holding Ltd. in terms of financial services. Apparently, it would also help Baidu pursue revenue streams outside its fundamental internet search business.

The deal comes at a time when the Chinese government is tightening its regulations regarding the loan market to control shadow banking and cut bad debt.

Baidu will divest a majority equity stake in FSG, which has been renamed as Du Xiaoman Financial. Du Xiaoman is expected to raise USD 1.9 billion through the transaction of which Du Xiaoman will keep USD 840 million and the remaining balance will be invested in purchasing existing stake. Baidu will own 42% stakes in Du Xiaoman which will thereafter operate independently of Baidu. The rest of the stakes in Du Xiaoman will be owned by the consortium.

Robin Li, Chairman and CEO of Baidu reportedly said in a statement that the transaction marks another milestone for Baidu and that he is pleased with the rapid growth that Du Xiaoman has experienced since its commencement in December 2015, to become a foremost player in the FinTech space with innovations powered by artificial intelligence.

Guang Zhu said that Du Xiaoman will use the AI capabilities of Baidu to achieve technological leverage in the FinTech scenario.

The agreement, subject to specific closing conditions, is expected to be finalized in the second half of 2018. Upon the completion of the transaction, it is anticipated that Du Xiaoman will become deconsolidated from Baidu's consolidated financial statements.



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Paroma Bhattacharya

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Paroma Bhattacharya

Paroma currently works as a content developer for Algosonline, MSF and a series of alike platforms. Fortified with a post-graduation degree in Journalism and Mass Communication, she delved head long into a writing career, creating resourceful and information enriched ...

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