UPDATE 1-EXCLUSIVE-Ping An seeks to sell $2.1 bln stake in Autohome -sources

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(Tencent adds details on the background)

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HONG KONG, Nov 12 (Businesshala) – Financial conglomerate Ping An Insurance Group is seeking to sell its 44% stake in China auto service portal Autohome, three people familiar with the situation told Businesshala.

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Ping An, which is currently the largest shareholder of Beijing-based Autohome through an offshore entity, has held talks with several strategic and private equity investors for a stake in recent months, the people said.

Based on Autom’s current valuation, this stake would be valued at around $2.15 billion.

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Autohomes is facing increasing difficulties in China, where automakers, especially electric vehicle (EV) makers, rely on their own distribution networks rather than dealerships for sales, the two people said.

This has affected the businesses of many dealers in the world’s largest auto market and then forced them to cut budget for online portals like Autohome, the people said.

Founded in 2005, Autohome primarily serves as an information portal for automobile buyers and an online car-trading marketplace in China.

Advertisements and fees from automakers and dealers typically account for more than 80% of its revenue as they use its platform for services, including brand and sales promotion.

Ping An, China’s largest insurance company by market value, declined to comment on “market rumours”. Autohome, which is listed in both New York and Hong Kong, did not immediately respond to a request for comment.

Autohome’s US-listed stock was down more than 70% on Thursday from a peak of $147.7 in January this year. It went public in Hong Kong in March with lukewarm interest, and its share price fell more than 60% from a peak of HK$199.60 in March.

Australian telecom giant Telstra sold its 47.4% stake in Autohome to Ping An in 2016 for $1.6 billion, saying Autohome will benefit from Ping An’s expertise in car insurance and financing as it moves away from being completely online. Done and offline sales started in China.

Ping An’s insurance business and investment returns have been hit by weakness in China’s economy, which posted its slowest growth in a year in the third quarter as power shortages and property sector concerns took a toll.

The insurer reported a 31.2% decline in third-quarter net profit due to lower premium income and loss on investment assets.

Two sources said Ping An had approached Tencent Holdings to sell the stake. Internet and gaming giants own Bitauto, an online platform similar to Autohome.

However, Tencent did not consider the deal viable due to antitrust concerns, one of them said.

Tencent did not immediately respond to a request for comment.

Autohome reported net revenue of $300 million and net income of $116 million in the second quarter of this year, down 16% and 9%, respectively, year-over-year.

According to its website, it has 64 million monthly active users on its mobile phone app and 45 million daily active users on its web portal. (Reporting by Julie Zhu and Ken Wu; Editing by Stephen Coates)

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