Re Joint Venture

RNS Number : 4997O

Evolution Group PLC

09 March 2009

 



The Evolution Group Plc

Evolution Group and First Eastern Financial Holdings Announce Joint Venture in China 

Evolution Group (the "Evolution Group", the "Group", the "Company"), the listed investment bank and private client investment management group, is pleased to announce that First Eastern Financial Holdings Limited ("First Eastern"), part of the First Eastern Investment group, China's leading direct investment firm, has made a significant investment into Evolution Securities China Limited ("ESCL"), the Group's subsidiary company focused on providing investment banking services to Chinese companies.

Following the investment, by way of a subscription for new ordinary shares in ESCL ("Ordinary Shares"), First Eastern will hold not less than 51% of the ordinary share capital of ESCL and Evolution Group, which is also making a further investment, will hold approximately 47.5%.

The partnership will combine the strengths of the Evolution Group's well financed and independent position in London with First Eastern's considerable experience and proprietary deal flow in the Chinese market. We believe this partnership provides the strategic opportunity for the Company to be First Eastern's principal partner in the UK and Hong Kong for a wide range of capital market opportunities.

About First Eastern

For over twenty years, First Eastern has built an extensive network of proprietary relationships at the highest levels across the Greater China region. Through this unique network, First Eastern has been instrumental in generating over US$5 billion in direct investments through its portfolio of over 100 projects in more than 30 cities across the region. It also brings with it a strong pre-IPO financing capability and the associated corporate finance skills on the ground in China. 

The joint venture will combine these strengths with the existing capabilities of ESCL in servicing the needs of Chinese public companies quoted on the London and/or Hong Kong stock markets and is expected to deliver significant benefits for the joint venture partners through potential primary and secondary fund raising opportunities and asset management opportunities, both in the Greater China region and in the UK. 

First Eastern's extensive experience in the Gulf, and its investment banking license there, mean that the joint venture will be able to offer Chinese corporations unrivalled flexibility in the provision of strategic investment advice and choice of capital markets.

Chinese Partnership Agreement

On 6 March 2009, the Company entered into an Investment Agreement with First Eastern. Under the terms of the Investment Agreement First Eastern and Evolution Group will between them invest an aggregate £900,000 by way of a subscription for new Ordinary Shares in ESCL.

First Eastern will contribute 55% of the investment, with Evolution Group contributing the remaining 45%. These shares, when issued, will represent 90% of all of the issued Ordinary Shares and it is anticipated that First Eastern will have a holding of at least 51% of the Ordinary Shares upon completion. Evolution Group's holding in ESCL will reduce from the current 70.94% to approximately 47.5%. The balance will be held by those remaining existing minority shareholders who elect to retain their interests, although an opportunity is being provided for those minority shareholders to realise their investment on completion of the Investment Agreement, should they so wish. Although First Eastern will have a majority shareholding, Evolution Group will continue to be represented on the Board of ESCL.

In addition to the funds now being invested, each of First Eastern and Evolution Group will enter into a financial commitment to ESCL pursuant to which they may each be called upon (at the discretion of the ESCL Board) to provide an aggregate of up to £500,000 by way of additional funding in each of the three years following completion of this transaction on the basis of 51% from First Eastern and 49% from Evolution.

Completion of the Investment Agreement is conditional on the approval of certain written resolutions of the existing shareholders of ESCL (in respect of which a sufficient number of such shareholders have irrevocably undertaken to approve the same) and the receipt of certain regulatory clearances to the satisfaction of Evolution Group and First Eastern. It is expected that these conditions will be satisfied and the Investment Agreement will be completed within a few weeks. Evolution Group has given certain warranties to First Eastern regarding information on ESCL and the nature of its business and operations.

Commenting on the new partnership, Alex Snow, Chief Executive of the Evolution Group said:

"I am delighted to announce our partnership with First Eastern and Victor Chu. This is an extremely exciting joint venture with China's largest direct investment group and their decision to enter into a partnership with Evolution Group is a significant endorsement of our capabilities. The First Eastern Group has an unrivalled track record and experience and this, combined with our expertise and strength in the UK and the Far East region, will deliver real opportunities between China and Europe."

Mr Victor L.L. Chu, Chairman of First Eastern commented: 

"We are thrilled to develop this exciting partnership with Evolution Group in China. This is the first time a strategic nexus in merchant banking linking London, Hong Kong, Shanghai, Beijing, and the Gulf region, has been created. We have no doubt that this unique platform will offer special value and innovation to our investees, partners and clients. There is vast interest in China to reach into London's capital markets, which offers enormous attraction to Chinese companies interested in global expansion. The platform we are creating today will contribute to the rapidly increasing synergy between UK and China."

                -Ends-

For further information, please contact:

The Evolution Group Plc Alex Snow, Chief Executive Officer		[phone]
First Eastern Group Victor Chu, Chairman		[phone]
Bell Pottinger Corporate and Financial for Evolution Group Charles Cook Mike Davies		[phone]
Brunswick Group for First Eastern Hong Kong Tim Payne Cindy Zheng London Deborah Spencer		[phone] [phone]  [phone]

Notes to Editors:

The Evolution Group Plc

The Evolution Group is the holding company of Evolution Securities Limited, Williams de Broë Limited and Evolution Securities China Limited. Founded in April 2001 and originally listed on AIM, the Evolution Group joined the Official List in 2003 and now has a market capitalisation of over £200million.

First Eastern Financial Holdings Limited

First Eastern is a leading Hong Kong-based investment group pioneering in the field of direct investments in China. Founded by Victor Chu in 1988, First Eastern has offices in Hong Kong, Beijing, Shanghai and Dubai.

First Eastern and its associates have invested into some 100 projects in China covering infrastructure projects, light industries, real-estate development and financial services.

Victor Chu is the Chairman of First Eastern Investment Group. He is also Chairman of First Eastern Investment Bank Limited and FE Securities Limited. 

Over the last 20 years, Victor Chu has served at various times as Director and Council Member of the Hong Kong Stock Exchange, Member of the Hong Kong Takeovers and Mergers Panel, Advisory Committee Member of the Securities and Futures Commission, and part-time member of Hong Kong Government's Central Policy Unit. Mr. Chu is currently a Foundation Board Member of the World Economic Forum in Geneva and co-chairs the Forum's International Business Council. He is also an Executive Board Member of the Paris-based International Chamber of Commerce and chairs the ICC Commission on Financial Services and Insurance on a worldwide basis.

Evolution Securities Limited is a leading investment bank focused on mid-cap UK public companies. It provides a full range of investment banking services including equity research, institutional sales and trading, market making and corporate finance advice. Evolution Securities Limited has over 70 retained corporate clients. It is authorised and regulated by the Financial Services Authority.

Williams de Broë Limited is a leading private client investment manager, with offices in Bath, Birmingham, Bournemouth, Edinburgh, Exeter, Guildford and London. Williams de Broë is authorised and regulated by the Financial Services Authority.

Evolution Securities China Limited ("ESCL") is a specialist Chinese investment banking business with offices in London, Hong Kong and Shanghai. It offers UK based institutional clients access to research and trading facilities in listed Chinese stocks and provides Chinese companies access to the markets in London and Hong Kong. ESCL won the Queen's Award for Enterprise in the International Trade Category on 21 April 2008. ESCL is authorised and regulated by the Financial Services Authority.

 

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