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Technology Stocks : Softbank Group Corp -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (5657)	2/1/2001 9:57:08 PM
From: TobagoJack	Respond to of 6018

WRAP: Softbank Invest -12% After Buying HK Fincl Svcs Co By KENNETH WONG Of DOW JONES NEWSWIRES HONG KONG -- Softbank Investment International (Strategic) Ltd. (H.SBI) said Thursday that it hasn't overpaid for a controlling stake in a Hong Kong financial services provider, although investors remained unconvinced and sent its shares down as much as 14% in just one day. The Hong Kong investment vehicle of Japan's biggest Internet investor Softbank Corp. (J.SFT), having stayed quiet after Softbank's high-profile takeover a year ago, agreed Wednesday to buy a 51% stake in the financial arm of e2-Capital (Holdings) Ltd. (H.ETC) for HK$318.5 million. The stake values the unit, which provides corporate finance and securities services, at a whopping HK$625 million, even though the unit reported only HK$26.9 million in operating profit in the first six months of last year. The operations' net assets were worth just slightly more than HK$70 million as of Dec. 31, 1999, the latest figure provided by the company. "The existing valuation isn't necessarily too high. For me, the most important thing is what kind of resources (e2-Capital) can provide for our future developments," Yoshitaka Kitao, chairman of Softbank Investment, told a news conference. e2-Capital will keep the remaining 49% in the financial unit, which will operate as a joint venture under the name SBI e2-Capital Ltd. Softbank Investment said the venture will become the "preferred investment bank" for Japan-based Softbank Investment Corp. and Softbank Finance Corp., both of which are Softbank units used by Softbank to control the Hong Kong-listed flagship. "I have been in the acquisition business for a long time, I can tell you one thing: if you want to buy a very good company, that will cost you (money)," the former investment banker said. However, Softbank shares, which resumed trading Thursday after a two-day suspension, fell immediately after the market opened, and were down 14% at one point. They ended down 12%, or 14 HK cents, at HK$1.02 on trade worth HK$33.4 million. Traders partly attribute the fall in share price to a hefty discount at which Softbank Investment plans to issue shares to pay for the e2-Capital subsidiary. According to the agreement, Softbank Investment will conduct two separate share issues: a HK$130 million share issue to its holding company, in return for cash to pay e2-Capital; and a HK$188.5 million share issue directly to e2-Capital. Both issues are priced at 98 HK cents, a 16% discount to Softbank Investment's last close, prompting shareholders to dump their holdings. Others said a 25% gain by the stock in the last two weeks gave investors an excuse to take profits. Softbank Investment will help SBI e2-Capital to expand its financial services offerings to cover portfolio and buyout funds management, as well as help bring its business to Europe and the U.S. The joint venture also plans to seek a listing, although no timetable or location has been fixed. Softbank Investment, formerly called Cheung Wah Development Co. Ltd., makes clothing and distributes dyestuffs, and was one of the many smaller companies that struggled to transform itself into an Internet firm at the height of the Internet frenzy last year. Last February its shares rose as high as HK$17.70, even though the company was in the red. With the backing of its new Japanese parent, Softbank Investment said it will continue to shed its loss-making operations. Kitao said the dyestuffs and apparel operations will soon be spun off to form a separate venture with a Japanese company. He declined to name the Japanese partner. Meanwhile, e2-Capital shares rose as much as 26% Thursday, on news it will receive HK$130 million cash for business development. It closed up 12%, at 47 HK cents. -By Kenneth Wong, Dow Jones Newswires; 852-2802-7002; kenneth.wong@dowjones.com