Baidu selling majority stake in financial services arm to investors, including TPG and Carlyle

Baidu Inc. on Sunday announced agreements to divest a majority stake in the financial services business the Beijing-based internet search giant launched in December 2015 to "certain investors," including private equity managers TPG and Carlyle Group.

Separate announcements by Baidu and TPG emphasized the potential of the group's technological prowess and data-crunching capabilities to drive the next generation of financial services, in areas such as microfinancing.

Nasdaq-listed Baidu said in an announcement to the exchange that the financial group will raise roughly $1.9 billion, leaving Baidu holding a 42% stake in the firm, to be renamed Du Xiaoman Financial.

TPG said in a separate announcement it and its co-investors will invest roughly $1 billion in the deal, which is expected to close in two to three months.

A Baidu spokeswoman said three TPG funds — TPG Capital Asia, TPG Growth and TPG's Rise Fund — together with investors led by TPG, are investing $1 billion, with Carlyle, Hong Kong-based ABC International Holdings, Taikang Group "and others" contributing the remaining $900 million.

Baidu's announcement said Guang Zhu, senior vice president and general manager of Baidu's financial services group, will become CEO of Du Xiaoman.

Robin Li, Baidu's chairman and CEO, said in the company's news release the transaction "marks another milestone for Baidu to incubate new businesses with large opportunities and strong synergies with Baidu's core business."

Chang Sun, TPG managing partner, China, in said in TPG's release that Baidu is harnessing technology and advanced analytics to capture growth opportunities as savings and lending activities move online, using "big data analytics" in areas such as microfinance and risk assessments for its customers.

The TPG announcement said in the just more than two years since Baidu launched its financial services group, its book of loans had grown to 28 billion renminbi ($4.4 billion).

The Baidu spokeswoman declined to provide further details on the stakes investors such as TPG and Carlyle will acquire in Du Xiaoman. Spokesman for TPG and Carlyle couldn't immediately be reached for further comment.