Tiger Brokers, a mainland Chinese online securities broker, has taken a minority stake in Hong Kong financial group AMTD. Terms of the deal were not disclosed but AMTD Group CEO Calvin Choi told DigFinit now values AMTD at $1.4 billion.
Tiger was established in 2014 by Wu Tianhua, an internet entrepreneur. He remains CEO and the biggest shareholder in Tiger. The second largest owner is Xiaomi. Other investors include Interactive Brokers, ZhenFund and Jim Rogers, the U.S. investor.
Tiger has developed data-driven online broking for mainland Chinese retail investors, giving them access to mainland, Hong Kong and U.S. securities. It is the second-largest online broker in China after Futu Securities (see here for a short video on Futu’s data-driven model).
Tiger’s tech is in keeping with the intensive data-driven style that has powered Xiaomi’s entry into financial services (as explained by Xiaomi co-founder Hong Feng here).
Tiger tech, Hong Kong market
For Tiger, the deal gives it a stake in a fast-growing international finance group with a record of making proprietary investments in tech companies, including fintech. Wu will sit on AMTD’s board, and Choi will sit on Tiger’s. This effectively extends Tiger’s reach to Hong Kong and other markets.
For AMTD, the attraction of the deal is to take Tiger’s retail technology-trading platform and deploy it to Hong Kong and other markets.
This gives AMTD an opportunity to use a tech-driven platform to expand beyond its wholly institutional business. AMTD conducts investment banking, asset management (primarily on behalf of mainland entities it helped list in Hong Kong, providing them with a de-facto offshore treasury), insurance brokerage, and prop investing.
It also will let AMTD support its technology investments as these companies get a chance to go public. In particular it can use Xiaomi-inspired data analytics on companies to value them and offer them bespoke capital-market products, far more cheaply and with more personalized and cost-effective levels than is currently available (assuming AMTD is able to acquire sufficient access to companies this way).
Is there a Xiaomi angle?
That suggests AMTD’s competitive advantage could be limited to companies with which it has a relationship other than just as an advisor. Its portfolio companies include the likes of China P2P company Dianrong along with smaller businesses such as Hong Kong startup FinEx Asia.
Beyond products and pricing, Tiger would give AMTD a trading capability in Hong Kong. This would let it support companies it sponsors in secondary markets.
Most intriguingly is the role that Xiaomi could play. Hong attended a signing ceremony between AMTD and Tiger held at Hong Kong Fintech Week.
DigFin asked Xiaomi’s Hong about the company’s plans to extend its financial services beyond mainland China. Hong said the company is looking at a virtual banking license in Hong Kong, not as a standalone business but in partnership with other players.
He would not comment on whether the company has an outstanding application with the Hong Kong Monetary Authority or when (or whether) he expects to launch such a business. Xiaomi now has an indirect stake in AMTD, via Tiger.