Losing streak

7 March 2016 By Robyn Mak Follow @mak_robyn

The e-commerce giant and its financial arm are taking control of a Hong Kong lottery firm at a deep discount. The $308 mln investment is a punt that Alibaba can help open up online betting in China. Shareholder reaction suggests Jack Ma’s name is losing some of its power.

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Hong Kong-listed AGTech said on March 6 that it has agreed to issue 4.82 billion new shares to a company jointly owned by e-commerce group Alibaba and its financial affiliate Ant Financial. AGTech will also issue HK$713 million ($91.9 million) worth of convertible bonds to Alibaba and Ant.

The lottery technology and services company will sell the shares at HK$0.35 each, raising HK$1.68 billion. The issue price represents a discount of 82 percent to the company’s average closing share price for the last 10 trading days.

Following the deal, Alibaba and Ant will jointly control 50.7 percent of AGTech’s enlarged share capital, assuming the convertible bonds are not converted immediately.

Alibaba said in a statement that China’s lottery industry offers “tremendous business potential”.

Shares of AGTech were down 6.53 percent to HK$1.86 by midday Hong Kong time on March 7.

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