Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce that it has today (Wednesday) signed a letter of intent to acquire a majority stake in a Shenzhen-based specialist financial markets technology firm. The proposed acquisition will support HKEX’s strategy to further build its financial markets technological capabilities, at a time of rapid change in the global exchange landscape.
HKEX intends to acquire a 51 per cent equity interest in Shenzhen Ronghui Tongjin Technology Co Ltd (Ronghui Tongjin), a technology services provider that specialises in financial exchanges, regulation technologies and data applications. The acquisition will be completed through an increase in registered capital of Ronghui Tongjin.
Ronghui Tongjin is a subsidiary of Shanghai-listed Shenzhen Kingdom Sci-Tech Co Ltd (Kingdom), one of China’s leading financial technology companies, with over 6,000 employees. Kingdom provides information-technology services to Chinese securities, asset management and integrated finance firms, as well as regulatory agencies.
“The global capital markets are being propelled forward by technological developments, and we are very pleased to have signed a letter of intent today with Ronghui Tongjin,” said HKEX Chief Executive Charles Li.
“As committed technology partners, together we will seek to further enhance our existing capabilities, expand our reach and create growth opportunities.”
Ronghui Tongjin, with a team of around 200 employees, has strong research and development capabilities in the financial markets technology services space, and will help reduce HKEX’s reliance on third-party vendors, help manage development costs and reduce implementation risks.
HKEX will also benefit in the longer term from Ronghui Tongjin’s network and technological capabilities to develop future IT strategic initiatives, tapping into new market segments and client bases.
It is expected, subject to the deal’s completion, that Kingdom’s equity interest in Ronghui Tongjin will fall to 29.4 per cent from the current 60 per cent, while the equity interest of Ronghui Tongjin’s employees will fall to 19.6 per cent from the current 40 per cent.
The transaction is subject to the signing of binding agreements. The parties intend to complete the transaction in the second quarter of 2019.
Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets. HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.
HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited. This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange, in China, in 2018.
HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.