Tencent unit buys into lottery provider China LotSynergy

Oct 16, 2014 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Hongze Lake Investment Ltd, a wholly held subsidiary of Tencent Holdings Ltd – which controls some of the most popular online social media platforms in mainland China – has agreed to subscribe to 594,034,513 shares of lottery technology firm China LotSynergy Holdings Ltd.

Hongze Lake will pay HKD445.5 million (US$57.4 million) or HKD0.75 per share, a discount of approximately 11.8 percent to the closing price on Monday, China LotSynergy said in a filing on Thursday.

After completion, Hongze Lake will own 7 percent of the enlarged share capital of China LotSynergy. The companies also agreed to an option for Hongze Lake to subscribe for a further 273,140,969 new shares at the price of HKD0.83 per unit. If exercised, Tencent’s subsidiary will control 9.90 percent of the issued share capital of China LotSynergy.

The Hong Kong-listed firm is engaged in the provision of technology and services for lottery systems, terminal equipment, gaming products and their operations in mainland China’s lottery market. The principal businesses range from video lottery (VLT), computer-generated ticket games and KENO-type lottery to new media lottery.

China LotSynergy posted a net profit of HKD54.9 million for the first half of 2014, up 35.2 percent over the same period last year.

Tencent provides Internet and mobile value-added services, e-commerce transactions services and online services in mainland China and international markets. The company’s services include QQ and the popular WeChat app, QQ Game Platform for online games, as well as e-commerce services.

China LotSynergy said the subscription “lays a good foundation for future cooperation between the group and Tencent”.

The net proceeds from the transactions will be used as “general working capital, general corporate purposes and investments when business opportunities arise,” the firm said in Thursday’s filing.

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