DJI in new China JV and raises £5.6m with share placing
CHESHIRE-based DJI Holdings, a licensed promoter and distributor of Chinese sports and welfare lottery products, has announced a joint venture with the Heilongjiang Sports Bureau and a placing of new ordinary shares to raise £5.6m.
Heilongjiang, in the north east of China, is the country’s sixth largest province by area with a population of approximately 40 million.
HSB operates or is responsible for all sports lottery activities in the province.
In 2014 sales were RMB7bn, an increase of more than 60% on 2013. HSB also owns and/or operates an extensive portfolio of sporting venues and facilities across the province, including Yabuli, China’s largest ski resort.
AIM-listed DJI and HSB intend to establish a joint venture company owned as to 40% by DJI and 60% t by HSB. DJI will proving funding of RMB20m (£2.0m) cash to the JV and HSB will provide a further RMB30m (£3.0m), of which RMB5m will be in cash and RMB25m will be in the form of certain key contracts.
The aim of the HSB joint venture is to provide funding and support services to all of HSB’s commercial activities, especially football and winter sports.
The deal allows DJI to overcome the temporary suspension, in March, of online sales in China pending regulatory changes.
Knutsford-headquartered DJI Holdings chief executive Darren Mercer said: “”This exciting and important joint venture is further evidence of DJI executing the strategy outlined at the time of our IPO.
“We are partnering with key provinces in China, increasing our channels to market and developing complementary revenue streams beyond lottery sales.
“Our deal with HSB is testament to the strength of our relationships in China, the scale, robustness and versatility of our technology platform and our ability and commitment to introduce innovative lottery games and sports related content and services.
“These are key components of our strategy to further increase DJI’s competitive advantage in the marketplace.
“The March 2015 temporary suspension of online sales continues pending regulatory changes. During this time DJI is repositioning itself in readiness for the significant revenue opportunities that a better regulated Chinese lottery sector will bring next year for high quality operators.
“In the meantime, we expect the new HSB joint venture to contribute significantly to revenues before the end of 2015. The expected continued online market penetration, followed by the roll out of the e-commerce platform, again supported by our agreements with major online portals, provides a sound basis for considerable revenue enhancement in 2016.”
