China Development Financial Holding Co (中華開發金控) has agreed to acquire Singapore-based futures brokerage Ong First Tradition Pte Ltd as part of an effort to extend its reach in the securities and futures trading business in Asia.
China Development Financial said a board meeting on Monday approved wholly-owned subsidiary KGI Securities Co (凱基證券) acquiring the Singapore futures brokerage for S$48.8 million (US$43.38 million), or S$16.27 per share.
The acquisition price represents a more than 100 percent premium over Ong First Tradition’s book value per share.
As the deal is pending regulatory approval in both Taiwan and Singapore, KGI Securities said it does not yet have a firm timetable to complete the transaction.
Ong First Tradition, established in 1984, was the first futures brokerage in Singapore and a pioneer clearing member of Singapore Exchange-Derivatives Trading, according to KGI Securities.
The firm has built an advantageous position in the Southeast Asian futures market over the past 30 years, thanks to a comprehensive product portfolio including finance, agriculture, energy and metal futures, KGI Securities said.
RETURN ON EQUITY
Since 2010, the Singaporean company has expanded its turf to foreign exchange futures products and the firm has proven its profitability by posting a more than 20 percent return on equity in the first eight months of this year, KGI Securities said.
KGI Securities obtained a futures trading license in Singapore in March and opened a branch in the city-state in May.
KGI Securities also has branches in Hong Kong and Thailand. The brokerage is also studying the possibility of opening outlets in Shanghai and Shenzhen.