Through its wholly-owned subsidiary CMBC International, the private lender consented to purchase between 8.8 billion to 13.3 billion new shares of the securities firm for HK$0.565 each.
The companies have signed a Memorandum of Understanding (MoU) which reflects that the parties will further negotiate in a bid to enter into a subscription agreement based on certain non-legally binding terms.
The offer price of a possible mandatory offer for the issued shares of Quam will be set at HK$1.38 per share under the MOU.
Margin finance business in China and Hong Kong is witnessing massive surge, with brokerages as well as financial services companies in the securities industry said to be raising billions of dollars in new funds, Reuters reported.
The companies said in a securities filing that completion of the transaction is subject to a formal agreement between them.
In case CMBC acquires all the new shares of Quam, it will have the option to hold up to 90.4% of the latter’s enlarged share capital.
Owned mostly by non-government enterprises, CMBC primarily focuses on making loans to small-medium enterprise with more than 200 banking outlets throughout China and relationships with over 700 banks overseas while financial services group Quam underwrites stock offerings, advises on mergers and acquisitions and manages client funds.
According to corporate filings, Quam’s chairman Bernard Pouliot holds a 28% stake in it, while 25.5% is owned by its CEO Kenneth Lam.
Image: Minsheng Bank Tower/Building in China. Photo: courtesy of Alex Needham
