Jack Ma
Alibaba Group Holding Ltd. and its main financial affiliate will spend HKD2.39 billion (USD308 million) buying control of Hong Kong-listed AGTech Holdings Ltd. to boost its lottery business in China.
Ali Fortune Investment Holding Ltd., a company majority-owned by China’s largest online retailer, agreed to buy HKD1.68 billion of shares and HKD712.6 million of convertible bonds in AGTech. It will own about 59.45 percent of the company upon full conversion, according to a filing this weekend to the Hong Kong stock exchange.
The acquisition marks the return of China’s e-commerce leader to the lucrative Chinese lottery businesses, after suspending operations due to increasingly onerous government restrictions.
AGTech, which runs lotteries in multiple provinces in China, will expand its games, hardware, and distribution across the country, the company said. China’s lottery business, which is strictly regulated by the government, had a participation rate of about 7.5 percent in 2013, compared with 56 percent in Hong Kong for 2012, showing potential for growth, the company said.
Alibaba and its affiliate will help AGTech with cloud computing, the company said in an e-mailed statement yesterday. Both will subscribe to AGTech’s shares at about HKD0.35 apiece. Shares in the Hong Kong-listed company closed 7.5 percent lower at HKD1.84.
Ali Fortune is 60 percent owned by Alibaba and 40 percent owned by Alipay-operator Zhejiang Ant Small & Micro Financial Services Group, also known as Ant Financial.
Alibaba’s earnings ended September were hurt by the suspension of its lottery business since late February last year due to regulation restrictions, the company said during n conference call in October. Bloomberg
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