Chinese tech giant, whose services include its popular search engine function, is looking to spin out its financial services arm in a $1.9 billion deal led by US investment company TPG.
The Da Xiao Man unit of Baidu is expected to be valued at $4 billion during the process, sources told the Financial Times.
California-based TPG will receive a 26% share in the spun-off company in return for a $1 billion investment, with Baidu retaining a 38% stake.
‘Spinning-off’ is usually employed when one division of a company finds itself out-of-step with the parent company’s core business. For Baidu, Da Xiao Man has been lagging behind the rest of the company in terms of growth and earnings, which announced a nearly 300% profit increase for 2018 Q1.
Established in 2015, Da Xiao Man has assets of $7.5 billion and liabilities of $6.6 billion. Its forecasted profits for the year are a relatively modest $600 million.