Macau junket boss Alvin Chau Cheok Wa is incorporating loss-making financial services businesses valued at HK$147.3 million (about US$20 million) into Hong Kong-listed Sun International Resources Ltd., a company listed on the Growth Enterprise Market (GEM) and engaged in the equine trade and online games of which Chau also owns a major interest. The connected transaction was announced in a filing with the Hong Kong Stock Exchange last week, which announced that Sun International Resources are acquiring the securities and asset management businesses at a consideration of HK$147.3 million from the vendor Sun International Financial Group Ltd. Sun International Financial Group is half owned by Alvin Chau, with the remaining half by Ms. Yeung So Mui, the spouse of Sun International Resources Ltd.’s chairman and executive director Cheng Ting Kong. Chau and Yeung are each a substantial shareholder with interests of about 47.14 per cent held in Sun International Resources. Sun International Resources’ scope of operation includes the equine business based in Melbourne and the provisioning of gambling software systems to ‘luxury cruise companies’, the company says on its official website. The securities and asset management businesses that Sun International Resources are to acquire have registered two consecutive years of losses, according to the filing. For the years ended March 31, 2014 and March 31, 2015, the losses that these businesses registered have exceeded HK$61.24 million, the filing information shows. The acquisition has yet to be approved by Sun International Resources’ independent shareholders. Chau and Yeung have also offered a breakeven guarantee provision on the acquisition deal with Sun International Resources, according to the filing. In the event that the securities and asset management businesses fails to achieve a before-tax profit for the year ending March 31, 2016, the vendor shall compensate Sun International Resources for the shortfall. Business potential Despite the loss-making performances seen in financial services and the recent volatility of the stock market, the executive director of Sun International Resources, Lui Man Wah, remarked to Hong Kong media that he still believed the securities businesses had room to grow. Mr. Lui said that Sun International Resources is planning to expand the margin financing business following completion of the acquisition deal. The company is also preparing to launch new products for its asset management business, to which it hopes to attract HK$500 million to HK$1 billion in capital within one year of launch, Mr. Lui was quoted as saying. Whether or not Sun International Resources will be raising capital from its shareholders will depend upon market conditions, Mr. Lui said. He noted that the company now has sufficient capital, and that its line of credit stands at about HK$150 million. As at the end of June, the vendor of the deal Sun International Financial Group had about 900 clients, of whom 70 per cent are from Hong Kong while the rest are from Mainland China and Southeast Asia, Mr. Lui told media.
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