Asia-focused investment company Alpha Returns Group is co-funding the proposed acquisition vehicle for Hong Kong stockbroker MY Securities.
Alpha’s partner is Singapore entrepreneur Miss Tong Shyn Leng, who will own 70% and Alpha will own 30%. Alpha will invest HK$9m in total in the joint venture payable in cash plus 26.7m of its own shares. At the suspension price of 1.75p a share, the investment is valued at £903,000, although the shares are nominally being issued at 1p each. Miss Tong is investing the equivalent of £1.37m for her 70% stake.
Alpha can add up to 40% of the investment vehicle to its exiting stake at the equivalent of £234,000 for each 10% stake. This is payable in cash or shares at a 50% discount to the market price on the day of the deal.
MY principally provides services to retail investors via its internet platform. The plan is to expand outside of Hong Kong and build up international operations in London and New York.
MY is being acquired for HK$6m plus net asset value at completion - probably by the end of June 2014. In the year to March 2013, MY made a profit of HK$142,000 (£11,000) on revenues of HK$3.1m (£242,000). Net assets were HK$21.6m (£1,69m) at the end of March 2013.
The first HK$500,000 has been paid with $2.5m payable by 15 January and the 26.7m Alpha shares being transferred to the vendors at a nominal price of 0.9p a share by 15 February. This covers the HK$6m payment.
At the suspension price of 1.75p a share, Alpha is valued at £8.29m.
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