Bright Smart plans IPO for online broadcaster

Broker's financial news service to be listed on Growth Enterprise Market, coming just weeks after float of its nightclub operator Magnum

PUBLISHED : Tuesday, 11 February, 2014, 1:57am
UPDATED : Tuesday, 11 February, 2014, 3:42am

Hong Kong broker Bright Smart Securities said it plans to spin off an online broadcasting business, hard on the heels of a well-received listing of its sister company Magnum Entertainment.

In an interview with the South China Morning Post, Peter Yip Mow-lum, chairman and largest shareholder of both Bright Smart and Magnum, said the planned spin-off listing was inspired by Hong Kong Television Network chairman Ricky Wong Wai-kay's HK$140 million acquisition of China Mobile Hong Kong, which holds a licence allowing it to offer mobile television services through the broadcast spectrum.

Yip said the broadcasting unit, which has about 14 staff currently, will be listed on the city's Growth Enterprise Market (GEM), a thinly traded alternative fundraising platform designated for start-ups.

"Under a free-of-charge model, the broadcasting unit, which will primarily focus on streaming local and mainland financial news with anchors, will target our existing 100,000 brokerage clients," said the 61-year-old entrepreneur. "The media unit has been operating for three years with a number of warrant issuers and brokers buying advertising."

He declined to comment on whether the unit is profitable, or the size and timetable of the upcoming offering, since it is under discussion with the city's securities regulators and the stock exchange.

Francis Kwok Sze-chi, an outspoken stock commentator and an executive director of Bright Smart, will lead the broadcasting unit, Yip added.

Under current GEM listing rules, companies must have a trading record of at least two financial years, including an operating cash flow of at least HK$20 million in total for the two financial years and a market capitalisation of HK$100 million at the time of listing.

In a recent round of funding the discount broker, which has seen its share price increase by 60 per cent since May last year, raised HK$94.16 million by issuing 75 million new shares, about half of its original plan to sell 150 million.

The newly issued shares were priced at HK$1.30 each to seven investors, including the local billionaire Cheng Yu-tung's Chow Tai Fook, the world's largest jewellery firm by market value.

The seven investors will receive put options, suggesting that they are protected from downward share price movements.

The firm said Chow Tai Fook, which bought the largest chunk of the deal, will became the second-largest shareholder in the broker firm.

Separately, the closely watched initial public offering of local nightclub and disco operator Magnum has drawn market speculation as to whether the true intention of a public offering was merely a prelude to a shell company, which can be easily fetched for at least HK$300 million to HK$500 million under today's market condition.

Yip rebutted the accusation and said: "We are not considering selling Magnum for three years."

Magnum's listing fees were equal to the company's annual earnings last year, raising questions about the firm's long-term development plan since the asset-light business model can be easily replicated.

Magnum raised more than HK$126 million through the float, with its retail tranche a record 3,500 times oversubscribed.