• by Richard Whitman , Columnist, July 22, 2018

WPP touts China as being high on the list of its “fast growth” markets and now it appears the holding company intends to bring on some big-name local investors to help take its Chinese operation, valued at $2.5 billion, to the next level growth-wise.

Sky News posted a report over the weekend indicating that WPP is in early talks with ecommerce giant Alibaba Group, tech and entertainment conglomerate Tencent Holdings and media company China Media Capital Holdings to sell a minority stake in WPP China. The Wall Street Journal followed with its own report. Both cited undisclosed sources, noting that WPP was not commenting at this time.

Sky reported that WPP wants to set up a separate holding company for its China operations and then sell roughly 20% of that unit to the three big Chinese firms who would hold roughly equal stakes.

Sky also reported that the deal originated while Martin Sorrell was still running the company (he left in April) but that current executive chairman Roberto Quarta has backed the plan and has been to China with co-chief operating officer Andrew Scott for talks with prospective buyers.

According to WPP’s 2017 annual report China was the firm’s fourth-largest market last year with $1.4 billion in revenue behind the U.S. ($7 billion), UK ($2.7 billion) and Spain ($2.1 billion).

The deal talks come as WPP has been evaluating its asset portfolio with an eye toward divesting of some properties. Since late last year it has sold its stake in Japanese agency ADK for and estimated $300 million, and agreed to sell its interests in ad-tech firm AppNexus and digital strategy and tech consultant Globant, which combined should add another $600 million or so to WPP’s coffers, which presumably will go to reducing the company’s $5-plus billion debt load.