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ICG AsiaWorks has announced three new Internet start-up investments in the wake of a huge loss of HK$1 billion for the first half.

The loss in the period to June 30 was mainly due to a provision of HK$1.02 billion for its toy and property businesses - elements it inherited from Harbour Ring International, the company Nasdaq-listed Internet Capital Group (ICG) took a majority stake in to achieve its May backdoor listing in Hong Kong.

'We have taken a prudent approach so that no further provision will be required for the existing business,' said newly appointed chief financial officer Rowena Chu.

However, she did not give

a breakdown between different businesses, claiming the provision accounted for the book value and the average market value of the operations for two years prior to ICG acquiring a stake.

She said book costs for the toy business, which was primarily a cash-equivalent business, were down to HK$200 million. She did not rule out selling the toy business back to Harbour Ring's founder Luk Chung-lam, but said there was no present plan to do so.

The toy business contributed a gross profit of HK$252,000 to

ICG AsiaWorks despite turnover down almost 41 per cent to HK$330 million, compared with the first half last year.

In March ICG agreed to pay HK$909 million for 54.9 per cent of Harbour Ring. Hutchison Whampoa is a 15 per cent shareholder of ICG AsiaWorks, which aims to transform itself into a provider of business-to-business services in Asia.

ICG AsiaWorks yesterday unveiled plans to invest US$15 million to US$20 million for three Asian Internet start-ups.

Chief executive officer Victor Hwang said ICG AsiaWorks had entered into two memorandums of understanding with Nasdaq-listed Breakaway Solutions and Singapore-based AceFusion.

Under these agreements it will form a joint venture with Breakaway Solutions to create a pan-Asian system integrator for e-business solutions. The company will invest in AceFusion to develop e-fulfilment software and services.

Ms Chu said the company would use a combination of cash and stocks to pay for these two investments, with contracts expected to be signed within a fortnight. Although the investment stake could not be disclosed, she hinted that ICG typically took an average of 36 per cent in a start-up with an investment of between US$5 million and US$10 million.

Last month ICG AsiaWorks agreed to invest US$10 million in MegaVillage.com, a virtual sourcing agent based in Hong Kong. The company will issue 52.5 million ICG AsiaWorks shares at HK$1.47 to double its stake in MegaVillage.com.

Ms Chu said the company had no problem in funding start-ups because it could take advantage of its HK$1.4 billion cash pile.

She said the company was in discussion with Hutchison Whampoa on a technical joint venture and would not rule out the possibility of taking a stake in some of the conglomerate's business-to-business start-ups.



ICG AsiaWorks on spree