Baidu sets up mas­sive in­vest­ment fund

China Daily (Canada) - - VIEW - By MENGJING mengjing@chi­nadaily.com.cn

Baidu Inc said on Wed­nes­day that it has es­tab­lished a multi billion-dollar in­vest­ment fund, a move to help the com­pany ob­tain promis­ing in­ter­net as­sets, an area in which the Chi­nese on­line search gi­ant trails be­hind its ri­vals.

The fund named Baidu Cap­i­tal with a war chest of $20 billion yuan ($ 3 billion) will fo­cus on in­vest­ing in mid and late-stage deals in the in­ter­net sec­tor. In­vest­ments can be in both yuan and US dol­lars, with in­vest­ment projects rang­ing from $50 mil­lion to $100 mil­lion.

Nas­daq-listed Baidu said that the fund re­ceives in­vest­ment from di­ver­si­fied back­grounds, in­clud­ing sev­eral in­sur­ance funds and se­cu­ri­ties firms.

In­dus­try in­sid­ers said that the es­tab­lish­ment of the fund is Baidu’s lat­est ef­fort to boost its in­vest­ment, a sig­nal that the­com­pany has placed more em­pha­sis on ac­quir­ing tech­nol­ogy and knowhow to jump­start its slow­ing search and ad­ver­tis­ing busi­ness, which has been con­strained by tighter gov­ern­ment con­trols on on­line ad­ver­tis­ing.

About a month ago, Baidu an­nounced the launch of a $200 mil­lion ven­ture cap­i­tal firm fo­cus­ing on in­vest­ing in early-stage projects in ar­ti­fi­cial in­tel­li­gence and other next-gen­er­a­tion tech­nolo­gies.

Lu Zhen­wang, an in­ter­net ex­pert and the chief ex­ec­u­tive of­fi­cer of Shang­hai-basedWan­qing Con­sul­tancy, said Baidu ur­gently needs to find new growth points to cope with the slow­ing mo­men­tum of its tra­di­tional search busi­ness.

“In­vest­ing in com­pa­nies out­side Baidu can help it branch out its busi­ness. It is al­ready slow in terms of mak­ing in­vest­ment com­pared with the other two in­ter­net gi­ants,” he said.

Data from Fel­low Plus showedthat since2011, the top three in­ter­net com­pa­nies — Baidu, Ten­cent Hold­ings Ltd and Alibaba Group Hold­ing Ltd — have made a to­tal in­vest­ment of 415 billion yuan in China. How­ever, Baidu seems the most con­ser­va­tive in terms of in­vest­ment. It in­vested in 93 projects com­pared with Ten­cent’s 305 pro­ject­sandAlibaba’s 171 projects, ac­cord­ing to pub­lic in­for­ma­tionon­itjuzi, a site fo­cusin­gon pro­vid­ing in­ter­net in­vest­ment re­lated data.

The search gi­ant has the low­est mar­ket value among China’s top three in­ter­net com­pa­nies and its net in­come for the quar­ter end­ing June 30 fell 34.1 per­cent year-onyear as it faced in­creased reg­u­la­tion in the health­care sec­tor and on in­ter­net ad­ver­tis­ing.

But Yin Sheng, an in­de­pen­dent an­a­lyst who has fol­lowed China’s in­ter­net in­dus­try for years, said it is a wise move for Baidu to gear up its in­vest­ment. “It would be wrong not to spend money to in­vest in the fu­ture,” he said.

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