Alibaba Buys AGTech Holdings For $308M To Boost Lottery Business

Alibaba is back in the lottery business. Last year, the e-commerce giant’s lucrative lottery business was suspended due to government’s restrictions. Now the Hangzhou-based company has reached a deal to buy controlling stake in Hong Kong-listed AGTech Holdings for $308 million. The transaction will take place through Ali Fortune Investment Holding Ltd, which is 60% owned by Alibaba and 40% by its financial services affiliate Ant Financial.

Alibaba buys AGTech shares at more than 80% discount

The deal will help Alibaba tap into China’s rapidly-growing lottery business. Ali Fortune will buy HK$712.6 million of convertible bonds and HK$1.68 billion of shares in AGTech. According to AGTech’s filing with the Hong Kong stock exchange, Ali Fortune will hold 59.45% equity after full conversion. The e-commerce giant acquired AGTech shares at highly discounted prices.

Charlie Munger: Invert And Use “Disconfirming Evidence”

Charlie MungerCharlie Munger is considered to be one of the best investors and thinkers alive today. His thoughts and statements on investment research, investment psychology, and general rational behavior are often incredibly insightful. Anyone can learn something from this billionaire investor and philosopher. Q2 2020 hedge fund letters, conferences and more If you’re looking for value Read More


Alibaba and its financial affiliate subscribed to the lottery company’s shares at HK$0.35 apiece, which represents an 82.5% discount over its last closing price of HK$1.99 per share on March 4. Following the transaction, the Jack Ma-led company will have the right to appoint five non-executive directors to the nine-member board of AGTech Holdings. It marks the return of China’s largest online retailer to the lottery business.

Alibaba to help AGTech expand aggressively

AGTech runs lotteries in 80% of China’s provinces. It is engaged in lottery management, online and mobile lottery, gaming software, systems, hardware and terminals. AGTech has a team of more than 200 professionals. China’s lottery business holds huge growth potential, even though it is strictly regulated by the government. In 2013, the country’s lottery business had a participation of just 7.5% compared to 56% in Hong Kong and 57% in the United States.

Alibaba and its financial affiliate will potentially leverage their e-commerce channels, mobile payment methods, cloud computing and other platforms to help AGTech expand aggressively. The Hangzhou-based company is diversifying its businesses to reduce its excessive reliance on e-commerce. Investors fear that China’s slowing economic growth will affect consumer spending in the country, which may have a direct impact on Alibaba’s sales.