China-based internet company Baidu spun out its financial services subsidiary, Du Xiaoman Financial, on Sunday with a $1.9bn commitment from investors including insurance provider Taikang and financial services firm ABC International.
Private equity group TPG and asset management firm Carlyle Group co-led the round, which also featured several unnamed backers. TPG invested $1bn through Rise Fund and two other vehicles that will jointly take a 26% stake in the company, according to ImpactAlpha.
The transaction will provide Du Xiaoman with $840m in cash while the remainder will be used by the consortium to purchase Baidu’s shares in the business. Baidu will own approximately 42% of Du Xiaoman once the deal closes in the second half of 2018.
Du Xiaoman, established in 2015 as Financial Services Group (FSG), offers a range of financial services, including consumer credit and wealth management.
The company will operate independently going forward and will be led by Guang Zhu, former senior vice-president of Baidu and general manager of FSG, as chief executive. Du Xiaoman is expected to formalise business collaboration agreements with Baidu once it is officially independent.
Zhu said: “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.”
The move was made just over a month after iQiyi, the online streaming platform in which Baidu holds a majority stake, went public in a $2.25bn initial public offering in the US.