HONG KONG (Reuters) – Baidu Inc (BIDU.O) and JD.com (JD.O) will join other big Chinese technology firms, including Tencent Holdings (0700.HK), to jointly invest about $12 billion into state-owned mobile carrier China Unicom, two people with direct knowledge of the matter said.
The move is part of efforts by China’s government to rejuvenate state behemoths with private capital. Beijing added China Unicom last year to a first batch of state-owned enterprises to see mixed-ownership reform.
Reuters reported last month that Alibaba Group Holdings (BABA.N) and Tencent would be among new investors putting a total of about $10 billion into China United Network Communications Ltd (600050.SS), China Unicom’s Shanghai-listed unit.
With the addition of money from Baidu, China’s biggest internet search provider, and second-largest e-commerce company JD.com, the total investment into that unit is likely to rise to about 80 billion yuan ($11.8 billion), the people said.
That would be the largest capital raising in the Asia-Pacific region since the initial public offering of insurer AIA Group (1299.HK) in 2010, according to Thomson Reuters data.
Baidu would invest about 10 billion yuan ($1.48 billion) and JD.com about 5 billion yuan, respectively, one of the people said.
The China Unicom unit is likely to raise 15 billion yuan from Tencent and 7 billion yuan from Alibaba, while China Life Investment Holding Co Ltd would be the biggest new investor, with a 20 billion yuan commitment, said the source.
The majority of the capital would be raised through new share issues, while China Unicom would also sell part of its stake in the Shanghai unit, the two people said.
Both sources declined to be identified as the talks are not public.
Baidu and JD.com declined to comment, and China Unicom, Alibaba and Tencent didn’t respond to Reuters requests for comment. China Life Investment Holding could not immediately be reached for comment.
China’s State-owned Assets Supervision and Administration Commission (SASAC), which oversees state enterprises, also did not respond to requests for comment.
Formally known as China United Network Communications Group Co Ltd, China Unicom is the weakest of China’s three major state-owned telecom firms, behind China Mobile (0941.HK) and China Telecom (0728.HK).
It is one of the world’s largest mobile carriers by user numbers, but competition in China is fierce, and its earnings have struggled in recent quarters. Private firms have moved ahead in developing cloud and big data services as well as mobile software.
China Unicom is widely seen as over-staffed, inefficient and slow to develop key technologies – prompting Beijing to take action via the mixed-ownership reform.
Reporting by Julie Zhu in Hong Kong, with additional reporting by Cate Cadell in Beijing and Sijia Jiang in Hong Kong; Editing by Ian Geoghegan