The Chinese search giant Baidu raised $1.9bn in April by selling the equivalent of 60 per cent of its financial services business.
But investors including TPG, Carlyle and Taikang Insurance were not buying simple equity, they were selling a form of debt that may in the future convert into equity.
Baidu needed cash to narrow the lead that Alibaba and Tencent have taken in China’s financial services market, but whether it can pull off the strategy is unclear. So investors limited their downside. They can redeem the security at a guaranteed 10 per cent return.
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