Shares of Value Convergence, the brokerage arm of Lawrence Ho Yau-lung's Melco Group, surged as much as 67 per cent yesterday after raising funds to buy a controlling stake in a small Macau bank. Growth Enterprise Market-listed Value Convergence raised HK$110 million through a top-up share placement to buy an undisclosed stake in Macau Chinese Bank. A casino boom in the enclave is expected to lift business and personal lending. The bank is 85 per cent owned by main board-listed Hongkong Chinese, a unit of Indonesian businessman Mochtar Riady's Lippo Group, according to Value Convergence. Value Convergence was seeking to reduce its reliance on revenue from brokerage and investment gains, which were unstable, Value Convergence chief executive Patrick Sun Ting-wah has said. He joined Value Convergence in August last year after working in investment banks including Kingsway Group and JP Morgan. To help fund the purchase of the Macau bank, Melco Group, which owns 63.39 per cent of Value Convergence, placed 50.7 million shares, or 19.96 per cent of the existing share capital, to six unnamed institutional investors at HK$2.20 a share. The price represents a discount of 6.38 per cent to the closing price on Friday when the shares were suspended. Melco Group then subscribed to the same amount of new shares at HK$2.20 each after the placement. Shares of Value Convergence, which have risen 141 per cent in the past 12 months, yesterday resumed trading and ended 52 per cent higher at HK$3.57 after reaching HK$3.92. Market sources said Value Convergence was still negotiating with Lippo and that the money raised from the share sales would not be enough to fund the controlling stake acquisition. Macau Chinese Bank, which has an outlet in the territory, last year recorded a 52 per cent increase in net profit to 8.5 million patacas, according to the Macau Monetary Authority website. However, the lender is facing increased competition from local banks as well as from cross-border competitors Wing Hang Bank and Bank of China, which are expanding in the former Portuguese enclave. Hongkong Chinese bought its stake in Macau Chinese Bank in May 2002 after it sold its key revenue earner, Hongkong Chinese Bank, to Citic Ka Wah Bank at the end of 2001. Value Convergence's earnings dropped 23.5 per cent to HK$7.5 million for the three months to the end of March even as revenue rose 26 per cent to HK$57.7 million on higher brokerage income. Along with other brokerage firms, Value Convergence's main brokerage business is facing fierce competition from electronic services. Value Convergence aims to raise US$100 million by the end of this year for its first private equity fund to invest in leisure and entertainment projects on the mainland. Melco has already contributed US$15 million to the fund.