Alibaba and its main financial affiliate spends $308 million to own nearly 60% of the AGTech Holdings to boost lottery businesses in China.
Reports published by Bloomberg suggest that Alibaba Group Holding, along with its financial affiliate, is willing to spend nearly $308 million (HK$ 2.39 billion) for its lottery business in China. Alibaba will be investing to have the control of AG Tech Holdings, which is listed in Hong Kong’s market but will help in boosting the lottery business of the company in its domestic market.
The main financial affiliate, which is majorly owned by the largest online retailer in China, is known as Ali Fortune Investment Holding. The deal suggests that the company has agreed to buy shares valued at HK$ 1.68 billion and convertible bonds valued at HK$ 712.6 million in AGTech Holding. According to its investment, Alibaba Group will have almost 59.45% ownership in the firm upon full conversion. This was confirmed by a regulatory filing to the Hong Kong Stock Exchange.
Recently, Alibaba asked numerous banks to raise an amount of up to $4 billion in order to fund its expansion plans. The firm is looking to expand in rural areas and improve its market status in international regions. It is currently focused to make an impact in the Indian market where it is directly taking on Amazon. However, it has not launched its own business in the foreign markets. It said to first create an image in the regions and then slowly expand for maximum results.
AGTech Holdings is already known for running lotteries in various provinces of China. With this acquisition, it seeks to further expand its game in the territory. This acquisition also means that Alibaba Group is returning to the profitable and moneymaking lottery businesses in China. Previously it was in this business but was forced to back out and stop operations because of severe restrictions imposed by the government.
AG Tech stated that it would expand its games, hardware, and distribution throughout China within the coming times. The company added that the lottery business of China had a participation rate of only 7.5% in 2013. It should be considered that this sector is strictly regulated as per the decision and restrictions of government. The Hong Kong’s lottery business participation rate in 2012 was 56%, which is impressive and showed signs of growth.
The leading e-commerce giant said that with its main financial affiliate, Alibaba Group will assist AG Tech with cloud computing.
Ali Fortune is a company majorly owned by Alibaba, which means that 60% of the main financial affiliate is with Alibaba Group whereas the remaining 40% is owned by Ant Financial, also known as Alipay’s operator ‘Zhejiang Ant Small & Micro Financial Services Group’.
Alibaba has been doing a tremendous business when it comes to e-commerce but its overall earnings and results were hurt because of its lottery business suspension. After a long time, it is all set to make it return in the business.
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