Venture capital firm, Hartcourt Companies, Inc. agreed to acquire 35 percent in UAC Stock Exchange On-LineCo Ltd, the pioneering operator of an online stock trading network in China.
The UAC 162 Network is run on CHINAPAC, an intranet of packet switched data
networks owned by China Telecom, and is designed to be a private, secure system
connecting investors to brokerage firms throughout China.
The UAC system has been operating at one office of Hua Xia Securities in Beijing with
good results, according to Harcourt representatives.
Hua Xia Securities, one of the largest brokerages in China, has signed an agreement to
install the UAC system in all of its 98 offices nationwide.
“With its technology and infrastructure, UAC has positioned itself to become the first
and major E*Trade in China,” said Dr. Alan Phan, Harcourt’s chairman and CEO.
“Its potential is mind-boggling, considering China’s stock market is already bigger than
the Hongkong stock market.”
“China’s stock market
is growing very fast, to quickly capture the market share and better serve the
investment community,” said Shi Zhang, UAC’s chairman and President of UAC. “We decided to team up with a foreign partner to access the
latest technology and world capital markets.”
UAC is the first CHINAPAC operating agent to be designated by China Telecom to
run an online trading network and is in good position to market its UAC 162 Network
to all brokerage firms in China.
According to Harcourt, there are currently 4,000 brokerage offices in China serving 40
million investors.
Total revenue, excluding the TV set-top box users segment, is projected to exceed
$40 Million by 2004 producing an annual net earning of $18 million.
Harcourt’s transaction for the stake of UAC is scheduled to close within the next 60
days.
Hartcourt has the option to increase its 35 percent if the Chinese government change its
policy regarding foreign ownership of telecommucation companies in order to be
admitted to the World Trade Organization (WTO).
Phan confirmed that Hartcourt has signed agreements to joint venture with two other
Internet companies in China including a national ISP.
“We set our goal last year to become a major Internet company in China,” he said. “With
the completion of these three acquisitions, our goal is fast becoming a reality.”
Earlier this year, Harcourt attempted to purchase a significant stake in Chinese portal,
China Infohighway, but the move failed for unknown reasons.
