E2-Capital Rises, Softbank Falls on Stake Purchase (Update3)
By Thomas Lau
Hong Kong, Feb. 1 (Bloomberg) -- Shares of e2-Capital Holdings Ltd. staged their biggest one-day gain in more than two months after Softbank Investment International (Strategic) Ltd. said it will pay HK$318.5 million ($40.8 million) to buy a stake in the company's financial unit.
E2-Capital shares surged 12 percent to 47 HK cents, their biggest one-day gain since Nov. 22. Meanwhile, Softbank Investment fell to a two-week-low of 12 percent on concern that it paid too much for the stake.
``Some investors may think that the valuation is too high,'' said Yoshitaka Kitao, the chief executive officer of Softbank. ``The consideration is relatively high, but we believe it could bear good fruit in the future.''
Companies such as Softbank are limiting risks by making investments with stable returns as share prices in Internet companies have plummeted in the past year. The e2-Capital purchase comes after Softbank Investment bought 10 percent of another financial service provider, Morningstar Asia Ltd., from Pacific Century CyberWorks Ltd. for HK$18.7 million in August.
Under the agreement, the Hong Kong-listed vehicle of Softbank Corp., Asia's largest Internet investor, will pay HK$130 million in cash for e2-Capital Securities (Holdings) Ltd. with the balance to be paid in Softbank shares, representing about 8.7 percent of the company's enlarged capital. Softbank will then own a 51 percent stake in e2-Capital Securities.
The new entity will be renamed SBI e2-Capital Ltd. on completion of the transaction. E2-Capital will hold the remaining 49 percent stake.
Today, E2-Capital rose 12 percent to 45 HK cents while Softbank fell 12 percent to HK$1.02.
quote.bloomberg.com
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