The founder of crypto exchange OKCoin, Star Xu, has acquired a controlling share in a Hong Kong-listed public company, leading to speculation the firm could be gearing up for a reverse IPO.
The deal saw Xu taking a majority stake in LEAP Holdings Group, a construction firm listed on the Hong Kong exchange. Having acquired some 3 billion shares, along with proportional voting rights, Xu is now the controlling influence of the company.
The completion of the deal comes just two weeks after OKCoin first filed its intentions with the stock exchange, and now presents OKCoin with an opportunity to list in Hong Kong as a result of the acquisition.
In documents published by the Hong Kong Stock Exchange (SEHK), it was noted that an agreement was reached to sell shares worth 60.49% of the company’s issued share capital, at a price equivalent to around $0.02 a share.
It noted, “The Board was informed by the Vendor (being the Controlling Shareholder immediately prior to Completion) that, on 10 January 2019, the Offeror (as purchaser), the Vendor (as vendor) and Mr. Wong (as warrantor) entered into the Sale and Purchase Agreement pursuant to which the Offeror has agreed to purchase and the Vendor has agreed to sell the 3,182,790,001 Sale Shares, representing approximately 60.49% of the entire issued share capital of the Company as at the date of this joint announcement, for the Consideration of HK$483,890,536 (being approximately HK$0.1520 per Sale Share).”
The development comes as the latest example of the trend for crypto exchanges buying up public companies to reverse IPO.
Earlier this week, major South Korean exchange Bithumb signed a letter of intent over a reverse merger in a US-listed firm, while Singapore exchange Huobi pulled off a similar maneuver for its Hong Kong listing after acquiring 66.26% of a previously unrelated company called Pantronic Holdings.
The advantage of a reverse merger for exchanges is that this often provides an easier, quicker way of listing on a stock exchange, without having to go through the listing approval process afresh, to provide access to market investors.
With more cryptocurrency exchanges considering this path, OKCoin is unlikely to be the last to list through this type of arrangement.
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