Exciting things are happening in Hong Kong’s retail trading industry this year – and I’m not just talking about the upcoming iFX Expo Asia. No, this Wednesday a mega-deal took place that will see ParagonEx, the owner of brokerage solutions provider Toyga, merging with two other companies, MICT and Brookfield Interactive Hong Kong (Brookfield), to form a new firm called Global Fintech Holdings (GFH).
The company is based in Hong Kong, where it is in the process of applying for requisite licensing. MICT, one of the companies taking part in the merger, is already listed on NASDAQ. That means, once the merger is complete, GFH will be listed on the New York-based stock exchange.
“We are thrilled to be at this stage after a prolonged effort from all sides involved in this complex deal,” Simon Duggan, CEO of ParagonEX, told Finance Magnates. “The future is very promising and with the technological know-how, marketing skills and 10 year experience we bring to the table, we are extremely optimistic about what’s in store for us in the upcoming years.”
A new company
In order to fund the various acquisitions required to complete the merger, GFH managed to raise an impressive $23.5 million and the company is valued at $283 million. As a result of the deal, ParagonEx, MICT and Brookfield will become subsidiaries of GFH. The new company will also spin off Micronet, a partially owned subsidiary of MICT that provides vehicle technology, which is listed on the Tel Aviv Stock Exchange.
Once it’s up and running, GFH will be providing trading services to the Chinese and South East Asian market.
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Many of our readers will be familiar with ParagonEx, which has now melded machine learning technology into its service offering, as a provider of software and platforms to the retail trading industry. Brookfield, on the other hand, has historically provided gaming and gambling services and technology to the Chinese market.
But with strong bonds between Brookfield and Chinese governmental authorities, GFH will be well placed to enter the retail trading market in China. And that, it seems, is exactly what the new company plans to do.
“ParagonEx and Brookfield Interactive (HK) are already developing new “play for fun” products to create new revenue streams for GFH,” the firm said in a statement. “These online games are expected to appeal to a different, yet larger, segment of end users who are not financial traders, but who wish to enjoy playing online financial trading games.”
ParagonEx heads to China
The merger comes at a good time for ParagonEx. A saturated, and now heavily regulated, European market has pushed firms to look for clients elsewhere.
China is certainly a good option for those brokers but it has been a difficult nut to crack for many firms. Erratic government crackdowns and problems with payment providers have prevented many brokers from doing business with the world’s largest population.
Having said that, solid know-how, boots on the ground and a good relationship with local authorities have, by and large, made business for firms operating there much easier. If GFH has those things at its disposal, it’s likely to do well in the future.