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Ping An Insurance

Australia’s Telstra to sell major stake in China’s Autohome to Ping An Insurance for US$1.6b

PUBLISHED : Friday, 15 April, 2016, 11:15pm
UPDATED : Friday, 15 April, 2016, 11:15pm

Telstra Corp, Australia’s largest telecommunications company, has agreed to sell most of its stake in Autohome, China’s leading online car retail website operator, to Ping An Insurance for US$1.6 billion.

The deal announced on Friday has Ping An acquiring 47.7 per cent of the total issued shares in New York-traded Autohome, while Telstra retains a 6.5 per cent interest in the online business that it has owned since 2008.

“For the next phase of the company’s development, as Autohome moves away from being purely online to operating an offline sales platform in China, it will benefit from a strategic investor in Ping An which has expertise in car insurance and financing,” Telstra chief executive Andrew Penn said.

The sale price of US$29.55 per share reflected a premium of 12.7 per cent to Autohome’s volume-weighted average price over the past 60 days, according to Telstra.

“Autohome has been an excellent investment for Telstra and demonstrates the opportunities that exist in the Asia-Pacific region,” Penn said.

Beijing-based Autohome saw a 62.4 per cent jump in revenue last year to 3.46 billion yuan (HK$4.14 billion), up from 2.13 billion yuan in 2014, on the back of its strong advertising and car dealer subscription services sales.

Autohome provides both professionally produced and user-generated content, as well as a comprehensive car library. Its extensive car listing information for consumers covers the entire car purchase and ownership cycle.

The company’s car dealer subscription and advertising services allow these businesses to market their inventory and services through its platform, extending the reach of their physical showrooms to potentially millions of internet users in China and generating sales leads for them.

During last November’s “Singles’ Day” online shopping festival in China, Autohome said it recorded more than 35,000 car transactions worth about 5.2 billion yuan on its platform -- representing a 40 per cent year-on-year increase.

The Ping An deal with Telstra has come roughly four months after Autohome launched its own consumer financing platform with the backing of Cangu Management, whose primary business is car financing and leasing.

“As one of the largest financial services companies in Asia with a nationwide presence and customer base in China, Ping An will be a strong partner for Autohome,” Penn said.

“Autohome has played an important role in building our presence in the Chinese technology sector and we look forward to working with Ping An and Autohome management as a minority investor in the next stage of the company’s evolution.”

He pointed out that use of the proceeds from that deal would include “potential capital management options”.

Bernstein senior analyst Chris Lane said in a report that Telstra has made a number of small bets across the Asia-Pacific in various growth areas, including “Asian connectivity and management services, China internet, video distribution, e-health and a host of small start-ups”.

Lane said he expected Telstra management to focus investments on business-to-business activities along the lines of Pacnet.

Telstra acquired Hong Kong and Singapore-based Pacnet, operator of Asia’s largest privately owned submarine cable network, for US$697 million in 2014.

That acquisition included Pacnet’s interest in its mainland joint venture, PBS, which is licensed to operate a domestic internet protocol virtual private network and provide data centre services in most major provinces.