Legend-owned payment platform to list via reverse merger
Lakala, a Chinese offline third-party payment services provider owned by Legend Holdings, is set to list on the Shanghai Stock Exchange through a reverse merger.
According to a filing, Tibet Tourism, a publicly-traded shell company, will acquire 100% of Lakala for RMB11 billion ($1.7 billion). It will pay RMB2.5 billion in cash and issue RMB8.5 billion worth of shares in exchange for Lakala shares held by 46 existing stakeholders.
Tibet Tourism will finance the deal through a RMB5.5 billion private placement. Legend Holdings has agreed to swap its Lakala interest for new shares in Tibet Tourism.
Founded in 2005, Lakala claims to be one of the earliest third-party payment service providers licensed by the People's Bank of China. It supplies terminals used in convenience stores, supermarkets and shopping malls to process offline transactions. It has also launched a number of patented personal payment devices.
Over the last two years, Lakala has expanded into other financial segments, such as online peer-to-peer (P2P) lending and wealth management on an online-to-offline (O2O) basis.
In June of last year, the firm raised $242 million from a group of investors including Taiping Life Insurance, China Reinsurance, China Continent Property & Casualty Insurance and the Civil Aviation Development Fund. Lei Jun, founder and CEO of Chinese smart phone maker Xiaomi, held a 1.26% stake in Lakala as of November 2015.
Upon completion of the backdoor listing, Taoran Sun, Lakala's founder and chairman, will have a 24.21% stake in the firm, while Legend Holdings will see its shareholding fall to 23.12% from the current 31.38%. Both Taiping Life Insurance and China Continent Property & Casualty Insurance will each own less than 1% in the listed company.
Lakala generated RMB1.59 billion in revenue in 2015, up from RMB910 million in 2014. The company generated a net profit of RMB126 million last year compared to a loss of RMB195 million in 2014.
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