China's Ant Group Enters Brokerage Sector with $362 Million Acquisition of Bright Smart

China's Ant Group is acquiring a majority interest in Hong Kong's Bright Smart Securities & Commodities Group for approximately $362 million, representing the fintech company's initial purchase of a securities brokerage license. Ant Group announced it would acquire a 50.55 per cent interest in Bright Smart for HK$2.81 billion ($362.26 million), according to a joint statement from the companies. Chairman Yip Mow Lum of Bright Smart is selling 857.98 million shares at HK$3.28 apiece to Ant Group's Wealthiness and Prosperity Holding, which must launch an unconditional mandatory cash offer for all outstanding shares. Bright Smart's shares surged by as much as 63.9 per cent to an all-time high on Monday following the Ant news.

Founded by Alibaba Group's founder, Jack Ma and 33 per cent owned by China's largest e-commerce firm, Ant runs the widely used mobile payment application Alipay in China. The funding followed Ant's refinancing of its $6.5 billion credit line last September, with some of the funds intended to strengthen its international operations, as reported by Bloomberg, referencing sources. In 2020, Chinese officials halted Ant's $37 billion IPO in Shanghai and Hong Kong and initiated a crackdown on Ma's business empire shortly after he delivered a speech in Shanghai in October, where he criticised financial regulators for hindering innovation.

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This eventually resulted in a compelled reorganisation of Ant and an almost $1 billion penalty imposed by Chinese authorities. Ant is currently working on obtaining a financial holding company license, and once it acquires this, it is expected to help revive its IPO ambitions. Bright Smart's shares, which were temporarily suspended from trading on April 23, reached HK$5, marking the peak since its launch in August 2010. The Hang Seng Index, a key benchmark, dropped 0.5 per cent on Monday. Ant plans to uphold Bright Smart's stock exchange listing, as stated in the joint announcement.

($1 = 7.7578 Hong Kong dollars)