Reports indicate that the finance unit of Chinese online search engine giant, Baidu, is looking for new investors. It is understood that the deal could raise approximately $2 billion and this will assist the company’s foray into financial services.
The investors will be offered the choice of acquiring some of the shares Baidu has in Baidu FSG – Baidu Financial Services Group. Alternatively the investors could purchase new stakes. Currently Baidu FSG is valued at approximately 18 billion yuan. According to sources the closing date of the fundraising effort by Baidu will close by April this year.
Some of the services that Baidu FSG operates include Baidu Wallet, a payment system as well as an online-based wealth management platform and an online lending service. The investment is expected to assist Baidu in narrowing the lead that rivals such as Tencent Holdings and Alibaba Group have with regards to financial services.
Ant Financial, an affiliate of Alibaba, operates the No. 1 online payment platform in China, Alipay, and provides services such as insurance, wealth management and online payments. Tencent on the other hand runs WeChat Pay. By the close of 2016, the number of activated accounts for Baidu Wallet were around 100 million but this was far behind what WeChat Pay and Ant Financial had in China.
Video content deals
Baidu’s fundraising effort comes in the wake of the Chinese online search giant indicating that it was set to ink more video content deals this year following an agreement it signed with Netflix. This was revealed by Ya-Qin Zhang, the president of Baidu, during an interview with CNBC in Davos.
“Our head of content is working hard to bring more content to China and to produce more content. You’ll see a lot more exciting deals,” said Zhang.
Baidu has an online streaming service known as iQiyi which currently boasts of about 400 million subscribers. In 2017 Netflix agreed to make some of its shows available on iQiyi and thereby giving the U.S. streaming giant access to the lucrative Chinese market. For various technology firms including Alibaba, Tencent, Facebook, Apple, Amazon and Netflix, content is viewed as a key growth driver
While the core business of Baidu is online advertising, stricter advertising rules that were introduced in China in 2016 had a negative impact on the online search company’s business. Baidu has however recovered since then even as it diversifies into video streaming, driverless cars and artificial intelligence.