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Alibaba bets on lottery firm AGTech with $308m

By Meng Jing (China Daily) Updated: 2016-03-08 07:45

Alibaba bets on lottery firm AGTech with $308m

Representatives of Alibaba Group hail the company's IPO at the New York Stock Exchange on Sept 19, 2014. [Photo/Xinhua]

Ali Fortune takes 60% stake, as online sales ban poised to be lifted

Alibaba Group Holding Ltd and its financial affiliate are buying a controlling stake in Hong Kong-listed lottery operator AGTech Holdings Ltd, for HK$2.39 billion ($308 million).

Ali Fortune Investment Holding Ltd, which is 60 percent owned by Alibaba and 40 percent owned by its financial services arm Zhejiang Ant Small & Micro Financial Services Group Co, has agreed to buy HK$1.68 billion in shares and HK$712.6 million of convertible bonds in AGTech.

The deal will give the Alibaba unit 59.45 percent of AGTech, according to the lottery operator's filing to the Hong Kong stock exchange on Sunday-a timely purchase as the suspension of online lottery sales looks likely to be lifted sometime this year.

The government banned unauthorized online lottery sales in April 2015.

AGTech is engaged in gaming technologies including game software and hardware, and lottery distribution.

Its filing said it will be the exclusive business platform of Alibaba and Ant Financial to apply for, and hold business qualifications and licenses for, the operations of lottery businesses.

Alibaba and its affiliate will also provide technical services and resources such as cloud computing services and e-commerce, said AGTech.

The company, which has 200 employees, said it "will benefit significantly" from the investor, should Internet channels for lottery sales re-open.

China has two State-run lotteries: the China Sports Lottery and China Welfare Lottery.

The Ministry of Finance approved two companies-500.com Ltd and China Sports Lottery Operation Co Ltd-to sell online lottery tickets, under a pilot program before the suspension.

Li Kai, an analyst with the Beijing-based Internet consultancy Analysys International, said that the suspension of online lottery sales is likely to be lifted within the year as officials at the annual lottery strategy meeting in January said they will actively push the preparatory work for a pilot online lottery sales program forward.

"China's lottery market is too big for two online lottery-selling companies to fill. More licenses are expected to be offered to more players," Li said.

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