Chinese search engine Baidu Inc. (NASDAQ: BIDU) has announced plans of making a deal worth $2 billion with new investors to deepen their footing into financial services. Investors will purchase some of Baidu’s shares in Baidu Financial Services Group (Baidu FSG) or purchase new stakes in the company, worth at about $2.8 billion. The company is ideally looking to attract between $1.5 billion and $2 billion where half of the proceeds will be raised by Baidu through selling down holdings in the unit. The fundraising is looking to close by April.
Through an online credit service and online wealth management platform called Baidu Wallet, Baidu FSG is able increase their lead ahead of competitors such as Alibaba Group and Tencent Holdings. This system attracts users from other financial services such as online credit where 100 million accounts have already been activated since 2016. Currently, Baidu Wallet is far behind rivals such as WeChat Pay and Ant Financial in mobile payments in China.
The company is also looking for a new revenue system outside of their search business as they continue to offer online financial services and products in that country. Baidu also owns several small financial licenses including a third party payment license and a fund sales license.