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Telstra pulling AU$2.1b out of China with sale of Autohome stake

Telstra is selling 47.7 percent of the Autohome business to Ping An; however, the Autohome CEO has stepped up with private equity to buy the stake for more.
Written by Corinne Reichert, Contributor

Telstra has announced that it has entered an agreement to sell 47.7 percent of total shares in Chinese online company Autohome for AU$2.1 billion to Chinese insurer Ping An Insurance Group.

Announced on Friday evening, the sale sees a price of $29.55 per share, with Telstra to retain a 6.5 percent stake in Autohome.

The sale has yet to be approved by Chinese regulators as well as the Autuhome board, and, according to a report by Reuters, the chief executive of Autohome, James Qin, has made a bid along with private equity firms Sequoia China and Boyu Capital and investment firm Hillhouse Capital to buy out Telstra's stake for $31.50 per share.

Telstra has owned shares in Autohome since 2008.

"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," Telstra CEO Andrew Penn said.

"Autohome has been an excellent investment for Telstra, and demonstrates the opportunities that exist in the Asia-Pacific region. Asia remains one of the key elements of our growth strategy. We continue to grow our enterprise services businesses in the region with strong consolidation opportunities in our Pacnet business, joint venture in Indonesia, and the exploration of future growth opportunities."

Once completed, Telstra is expecting to record an accounting gain of around AU$1.8 billion, subject to adjustments. Penn said the telecommunications provider is considering how it will use the funds, including possible capital management.

Telstra has been investing in the Asian region for the past few years, having acquired Pacnet for $697 million in December 2014.

In January, Telstra then acquired Kloud, which provides professional and managed cloud services to enterprises for more than 80 corporate and government customers across the Asia-Pacific region, along with Chinese cloud services company Qiniu.

Telstra Ventures also made a multimillion-dollar investment in Taiwanese video big data and analytics company Gorilla Technology Group in March 2015, saying the company could provide beneficial video analytic software solutions for the government, security, broadcast, and retail sectors.

However, Telstra retired Pacnet's branding in April 2015 and sold off the company's Singaporean and Thai ISP assets for AU$4.4 million to a Singaporean cloud and datacentre company in November, as well as backing out of a $1 billion wireless joint venture in the Philippines with Filipino giant San Miguel Corporation last month.

Penn said at the time that Telstra will, however, continue eyeing opportunities for Asian expansion.

"We continue to pursue growth opportunities in Asia, consistent with our strategy," Penn said.

"Following our April 2015 acquisition of Pacnet, Telstra is now one of the largest connectivity providers in Asia.

"Our investment decisions will be guided by our capital management framework. Investments remain an important part of our future to ensure sustainable growth in earnings and shareholder returns over time."

Telstra has additionally invested in tech companies worldwide over the past two years; it acquired unified communications solutions and contact centre provider North Shore Connections Group in August 2013; network integration services provider O2 Networks for a reported AU$60 million in January 2014; and information security, networking, and data management provider Bridgepoint in October 2014.

Telstra also invested $270 million in Silicon Valley-based video-streaming and analytics company Ooyala, taking control of the company in the process in August 2014. This was followed in September by Telstra contributing to a $50 million Series D funding round for ecommerce platform Bigcommerce, and joining a number of other backers in a funding round for DocuSign, an electronic signatures company.

In December 2014, Telstra Ventures announced an equity investment in Elemental, a software-defined video solutions provider for multi-screen content delivery, and a minority equity stake in Panviva, an Australian cloud-computing business process guidance software provider.

On the ehealth side of things, Telstra acquired UK health analytics company Dr Foster in March 2015; in April 2015, Telstra Health acquired telehealth service Anywhere Healthcare; and in October 2015, the telco acquired ehealth management system EOS Technologies.

At the end of last year, Telstra also pledged AU$10 million over five years to aid in the development of the world's first silicon-based quantum computer at the University of New South Wales' Centre for Quantum Computation and Communications Technology.

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