SINGAPORE - Financial services group Pine Capital plans to buy up to a 51 per cent stake in Hong Kong-based asset management firm Silver Tree Hong Kong for HK$2.55 million ($447,368.43) in shares, according to an announcement on Tuesday (Dec 11) before the market opened.
The acquisition will be made in two stages. Pine Capital will acquire the first 9.9 per cent stake in Silver Tree upon the successful completion of due diligence and relevant approvals. The remaining 41.1 per cent will be acquired upon obtaining further approvals, including from Pine Capital shareholders. The seller of the Silver Tree shares is David Sarkis, a 27-year financial industry veteran who currently heads Silver Tree's investment management team and is its sole shareholder.
The consideration for the purchase will be met by the issuance of 165.7 million new Pine Capital shares at 0.27 cent apiece, which is a 170 per cent premium to Pine Capital's volume-weighted average price of 0.1 cent on Dec 7.
The new shares represent 2.84 per cent of Pine Capital's outstanding issued shares as at Dec 7. The company had however proposed a placement of 799 million new shares at 0.27 cent per share on Nov 27, and has taken a convertible loan facility that could be converted into one billion new shares at 0.27 cent each. Including the placement and assuming the convertible loan is fully converted, the consideration shares for the Silver Tree acquisition will represent about 2.1 per cent of Pine Capital's enlarged share base.
Pine Capital said that the intention of the acquisition is to enhance "its service capacity in the asset management industry by accessing broader sources of capital flows". Silver Tree will help Pine Capital to broaden its client base, to procure new sources of revenue and to obtain the required licence to break into the Hong Kong market, the company said.
Silver Tree was incorporated in Hong Kong in June 2010. It posted a net loss of HK$10.8 million for the year ended Dec 31, 2017, and had a net tangible asset value of HK$9.5 million as at end-2017.