Baidu-backed video service iQiyi raises 1.53 billion

BEIJING (Reuters) -, the video subsidiary of Chinese internet company Baidu Inc BIDU.O, has raised $1.53 billion in new funds to compete with rivals in the country's hotly contested online entertainment sector.

The investment took the form of convertible bonds issued by iQiyi to investors including Baidu, Hillhouse Capital, IDG Capital and Sequoia Capital, Baidu said in a statement on Tuesday.

Baidu invested $300 million as part of the issuance.

“iQiyi has been a great asset and an important part of the Baidu ecosystem,” Baidu Chief Executive Robin Li said in the statement.

iQiyi is a video steaming service that hosts free and subscription services. According to research figures cited by Baidu the mobile app had 481 million monthly active users as of December 2016.

iQiyi's main competitors in the market include a video service backed by Tencent Holdings Ltd 0700.HK and Youku Tudou, which was fully acquired by Alibaba Holdings Ltd BABA.N in 2015.

Reporting by Cate Cadell; editing by Susan Thomas