The acquisition heralds entry into Hong Kong's financial services industry
BEIJING, July 16, 2020 /PRNewswire/ -- Future Fintech Group, a leading blockchain e-commerce and financial technology company (NASDAQ: FTFT) (“Future Fintech”, “FTFT”, or “the Company”) announced today that following the press release issued on March 26, 2020, the company has signed a “Stock Exchange Agreement” (“Agreement”) with Hong Kong Lefeng Enterprise Limited (“Hong Kong Lefeng”) to acquire Hong Kong Junxian Asset Management Co., Ltd. (“Hong Kong Jun”) from Hong Kong Lefeng (“Hyun Asset”) 90% of the shares of issued tradable shares. Hong Kong Junxian Asset is an asset management company dedicated to achieving reliable, absolute return and multi-dimensional portfolio management in Hong Kong. It has Class 4 “Securities Advisory” and Type 9 “Asset Management” financial licenses issued by the Hong Kong Securities and Futures Commission (SFC); its current partners include major international banks; the team members include former senior executives of HSBC, Hong Kong certified public accountants, and rich experience in asset management, investment banking and extensive contacts.
According to the terms of the agreement, the total purchase price of 90% of Hong Kong Junxian's assets is HK$54,000,000 (approximately US$6,966,885), while 40% of the purchase price of HK$21,600,000 will be paid to Hong Kong Lok Fung Hong Kong using the company's common stock at the time of completion of the transaction. The remaining 60% will be paid annually (profitability payment) in accordance with the pre-interest and tax profit targets achieved by Hong Kong Junxian assets in 2020 and 2021. The detailed terms are as follows:
(i) If Hong Kong Junxian Assets achieves a profit before interest and tax of HK$5,000,000 in 2020 (the “2020 profit target before interest and tax”), the company shall pay 30% of the purchase price, or HK$16,200,000, in the form of common stock;
(ii) If Hong Kong Junxian Assets achieves a profit before interest and tax of HK$10,000,000 in 2021 (the “2021 profit target before interest and tax”), the company shall pay 30% of the purchase price, or HK$16,200,000, in the form of common stock;
(iii) If Hong Kong Junxian's assets fail to achieve the profit target before interest and tax for the current year, the two parties agree to set leniency clauses. To avoid doubt, if Hong Kong Junxian assets show no less than 60% of the profit target before interest and tax in the specified year, then the number of shares paid for profitability in that year should not be reduced. If Jun-hyeon falls below the profit target before interest and tax by 60% in the specified year, the number of profitable payable shares for that year should be reduced to zero.
Mr. Huang Shanchun, CEO of Future Fintech, commented, “We have always been keen to find competitive partners in the field of fintech and boutique financial services. This acquisition marks the future expansion and strengthening of fintech's global business, and is an important step in our innovative financial services business. The acquisition is expected to drive future fintech development, thereby opening up a market-leading platform to provide asset management and investment advisory services to corporate clients and high-net-worth professional investors in Hong Kong and around the world.”
Mr. Chen Shaoji, CEO and Director of Hong Kong Junxian Assets, said, “We are delighted to establish a deep strategic partnership with future fintech. Our business focus is on moving in sync with our clients to increase wealth and achieve investment goals. In today's uncertain times, we focus on exploring potential industries and opportunities while also taking into account the interests of our clients and providing them with tailored and flexible investment strategies. We will use the additional resources, technology and platforms provided by FTFT to further develop our business in Hong Kong and around the world.”