When Celestial Asia Securities Holdings (CASH) proposed a HK$200 million acquisition of a furniture retailer, privately controlled by its chairman, many onlookers thought they might be witnessing a typical connected transaction that had nothing to do with the listed firm's core business. But Bankee Kwan Pak-hoo, the chairman of CASH, defended the transaction. 'What we plan to do is a horizontal expansion. 'Through the strategy, we hope to have a scalability to increase our revenue streams from different service sectors.' The transaction forms part of a trend of online companies that raised funds in last year's boom conditions now investing in apparently unrelated off-line businesses. After the acquisition, CASH will use Pricerite's furniture stores to 'cross-sell' its financial products, Mr Kwan said. Some critics believe the transaction will chiefly benefit Mr Kwan, who is Pricerite's chairman and controlling shareholder. They said Mr Kwan should make a paper profit exceeding HK$40 million, as CASH had offered a higher price than Mr Kwan paid for his 57 per cent controlling stake, which he bought last February. Under the proposed acquisition, the brokerage is paying the share equivalent of 35 HK cents for each Pricerite share, compared with 20 HK cents a share paid by Mr Kwan. But Mr Kwan said the comparison was unfair. 'I bought the shares with cash last year. 'In this acquisition, however, the consideration I will receive is CASH's new shares,' he said. Moreover, 'the financial status of Pricerite now is also different from then,' Mr Kwan added. The retailer had been posting rising losses in the three years between 1998 and 2000. After Mr Kwan's purchase the firm reversed its losses to make a HK$6 million profit in the first half to September, Mr Kwan said. Pricerite owns about 40 outlets selling furniture and household products in Hong Kong, compared with CASH, which operates about 10 branches that provide broking and other financial services. Mr Kwan said the strategy could help improve the cyclical effect and limited profit margin of CASH's existing brokerage business. The acquisition could also give the firm a springboard to enter the mainland's immense consumer market, Mr Kwan added. 'It is difficult to grow a business which is only based on a 7.5 million population,' Mr Kwan said. However, new business opportunities in the mainland consumer market would emerge, as the country was expected to further open the sector after its entry to the World Trade Organisation, he said, arguing CASH could take its business to mainland customers. Mr Kwan said CASH held about HK$600 million war chest, which could fund further acquisitions of other businesses.