Huobi, a Singapore-based and Chinese-owned cryptocurrency exchange, has acquired controlling stake in Hong Kong-listed Pantronics Holdings (01611.HK), a move seen as aimed at working toward a backdoor listing.
The deal marks the first time a crypto exchange is taking over a public company in Hong Kong to get listed in an indirect route.
Pantronics shares were halted from trade on August 22 ahead of the announcement of the Huobi deal. They resumed trade today, surging as much as 120 percent in early hours.
As of noon, the stock was changing hands at HK$5.69, up 84 percent from its previous close.
Huobi, through several subsidiaries, has acquired about 215 million shares of Pantronics, representing approximately 71.67 percent of the listed firm.
The shares were purchased for over HK$586 million in total, equivalent to HK$2.72 per share, according to a regulatory filing.
The acquisition was a reverse takeover conducted by Huobi Global, which is controlled by Li Lin, founder and chairman of Huobi Group.
According to the filing, Huobi Group comprises a number of companies such as Huobi Global Ltd (Seychelles), which runs a leading global digital asset trading platform, and Huobi Capital, which focuses on the blockchain industry venture capital.
With the disclosed transaction, Li has become the largest shareholder of Pantronics, which specializes in electronics manufacturing services.
Pantronics was established in 1990 and went public in 2016.
Huobi said it will utilize its knowledge and experience in the areas of blockchain and financial technology, “to develop new businesses in such areas and also in areas that develop and provide technical infrastructure and solutions serving the cryptographic assets trading platform, building tools and marketplace for digital assets, and develop storage solutions for such assets.”
Detailed business plans are, however, yet to be chalked out.
Market watchers speculate that Huobi could use Pantronics to raise fresh capital through a secondary offering.
If that happens, Huobi will join a growing list of Chinese private firms in the cryptocurrency space that are planning to raise capital from the public market.
In recent months, three of the world’s largest bitcoin mining equipment makers — Bitmain, Canaan, and Ebang International — have revealed plans for Hong Kong listings.
The prospects are, however, uncertain as demand has waned for “mining chips” for cryptocurrencies following a big decline in prices of bitcoin and other virtual currencies since the start of the year.
According to data from CoinMarketCap, Huobi Token, the cryptocurrency issued by Huobi, is currently trading at US$2.30 per token, down 158 percent from a US$5.95 high recorded in June, with the market cap at US$114 million.
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