Tech firm to raise £10.5m for ‘transformational’ Chinese deal

DJI Holdings, the Cheshire company which promotes and distributes Chinese sports and welfare lottery products, has announced a placing to raise £10.5m.

It will use the money to fund a “transformational deal”, working with Xinhuatong, the main operator of the Xinhua News App owned by China’s national news agency, to create an app for mobile payments and information.

It will supply game technology platforms and facilitate mobile payments through the Xinhua News Mobile App for public utility bills including electricity, gas, water, mobile phone top-ups and traffic fines in an initial seven of 12 targeted provinces in China.

The agreements are for an initial three year period and provide for a profit share between the parties subject to certain guaranteed minimum payments to the provinces.

Xinhua intends for the Xinhua News Mobile App to become a leading mobile unified information platform for all Chinese citizens. It launched its mobile news app in June 2015 and is reported to have already registered 120 million by February 2016.  It is expected that the recent average growth of 10 million users per month will continue into the foreseeable future as the app develops additional functionality and the partners believe that the app will reach 300 million registered users during 2017.

DJI is placing new ordinary shares in the company to raise approximately £10.5m before expenses through Mirabaud Securities, at a price of 60p per share.

Darren Mercer, chief executive of DJI Holdings, said: “The Xinhuatong partnership, utilising our platform to support the Xinhua News App, is a game changer for DJI, both strategically and financially.

“Together with Xinhuatong and NewNet, we have the opportunity to place our technology at the heart of one of China’s leading and most important portals. Our joint efforts will enhance brand awareness, reputation and customer loyalty for the Xinhua mobile app, attracting more users to achieve economic and social benefits for the Chinese people.

“It is testament to the robustness and versatility of DJI’s technology platform and to our marketing skills that we have secured an important agreement with Xinhuatong and NewNet to support this powerful app. We expect this partnership to make a substantial contribution to DJI’s revenues in the remainder of 2016 and beyond.”

Dong Jinhua, chairman of Xinhuatong, said: “We want to make it easier for hundreds of millions of Chinese people to conduct their daily lives using mobile technology, in line with the government’s Internet Plus strategy for putting individuals, communities and businesses online. It is exciting to be partnering with DJI’s game and payment technology platform to roll out a product that will have truly national reach through the Xinhua news app. We look forward to adding features that will make this already great app indispensable to all who use it.”

Eversheds’ Mancehster office advised the company, with a team comprising Danny Hall Elizabeth Tindall and Helen Yeung.