TPG’s Rise Fund makes first China investment

TPG and its co-investors put in approximately $1bn for Baidu’s financial services group.

Private equity heavyweight TPG has sealed its first China investment from the Rise Fund, its $2 billion global impact fund, investing approximately $1 billion in Baidu Financial Services Group alongside its co-investors.

TPG made the investment in Baidu FSG from three vehicles: the 2016-vintage TPG Asia VII, which is targeting $4.5 billion, the Rise Fund and its TPG Growth platform, according to a statement. It did not provide further financial details on the transaction.

Chang Sun, TPG managing partner, China, said: “As savings and lending activities move online, technology companies are able to use their big data analytics to offer flexible micro-financing to the younger generation of consumers.”

Baidu FSG, which will be rebranded as Du Xiao Man, will be spun off following the deal. It was launched in 2015 and uses artificial intelligence to provide short-term lending and financial inclusion across China.

Financial services is one of the key investment sectors of the fund, along with agriculture and food, technology, infrastructure, energy, healthcare and education. A significant portion of the Rise Fund has been deployed in 12 investments so far, including data platform Dharma, Indian dairy company Dodla Dairy and digital education platform DigiFi, a TPG spokesperson told PEI.

TPG raised Rise Fund in about seven months and counts the Washington State Investment Board, Florida State Board of Administration and New Jersey Division of Investment among its investors, according to PEI data.

The Carlyle Group and China’s Taikang Insurance Group also invested in the financing round, bringing the total investment in Baidu FSG to $1.9 billion. It is unclear where Carlyle made the investment from; the GP is seeking up to $5 billion for its fifth Asia buyout fund.