MONTVALE, N.J., April 15, 2020 /PRNewswire/ -- MICT, Inc.
(Nasdaq: MICT) ("MICT" or the "Company") announced today
that it has entered into an Amended and Restated Agreement and
Plan of Merger to acquire a wholly-owned subsidiary of Global
Fintech Holdings Ltd ("GFH"), subject to certain closing
conditions. Simultaneously, the Company has approved a private
placement of convertible notes of up to $15
million, which shall be convertible into shares of MICT
common stock at a conversion price of $1.10, consisting of $11
million of committed funding, with the ability to raise an
additional $4 million on the same
terms.
The acquisition and fundraise follow MICT's strategic decision
announced in 2019 to move into the rapidly growing global fintech
sector. The Company plans to deploy the funds raised to, among
other things, make further fintech related acquisitions and enter
into partnerships that are contemplated to deliver immediate
earnings growth and enhance long-term shareholder value, as well as
to further develop GFH's online platforms.
The GFH acquisition gives MICT ownership of a versatile
proprietary trading technology platform designed to serve a large
number of high growth sectors, as well as to interface with
platforms used by strategic partners. Primary areas of focus
include online brokerage for equities trading and sales of
insurance products in several foreign markets. The early and
primary focus will be on the provision of services in China, where the significant growth in the
country's affluent class has driven a surge in demand for
investment products and wealth management services. It is believed
that this rapidly growing yet still nascent market offers a
valuable opportunity for MICT, through its acquisition of GFH, to
leverage its robust platform to serve Chinese investors who seek to
participate in both their domestic financial market and in the
established markets of London,
New York, and Hong Kong.
Online Brokerage
Online stock trading volumes quadrupled from $445 billion in 2018 to $1.8 trillion in 2019 in China. The country's burgeoning middle class
are increasingly investing and trading online, driven by recent
changes in the regulatory environment coupled with China's economic growth and development. GFH
is at an advanced stage of launching its stock trading offering in
China. Over the past 18 months,
GFH has accumulated a significant database of several million
active users who regularly trade stocks or transact in other
financial services products that GFH intends to support in the
future. It is believed that this database positions the Company
strongly, and it is contemplated that the Company shall, through
this database, enter into partnerships in the future with some of
China's leading internet portals.
GFH's platform is designed to serve both the B2B and B2C
market.
Insurance
While the explosive growth of Chinese stock trading is expected
to continue, MICT's near-term opportunities through its
purchase of GFH also include the insurance sector, in which GFH has
developed a number of key commercial relationships. GFH has
recently been focused on launching certain online insurance
brokerage platforms for retail and commercial clients. Although
China's market for insurance
products is still in its early stages of development, it has
already experienced significant growth, with non-life premiums
standing at $147 billion in 2017 and
life premiums at $383 billion. By
2032, total insurance premiums in China are estimated to reach $2.36 trillion, overtaking the US market by
almost $1 trillion. GFH is believed
to have identified emerging segments of the Chinese insurance
market characterized by high demand, where it is contemplated that
the Company's platform shall be successful in making a suite of new
insurance products broadly available.
The post-merger MICT business is underpinned by what is believed
to be GFH's competitive advantage in certain major global markets,
including its technology platform which has already been deployed
in China, and management's
longstanding relationships with Chinese corporations and
governments, as well as GFH's own substantial database. Leveraging
these advantages, the Company plans to execute on numerous fintech
sector and geographic growth and acquisition opportunities in the
coming months.
Effective April 2, 2020,
Darren Mercer, CEO of GFH and board
member of MICT, assumed the role of interim Chief Executive Officer
of the Company. David Lucatz resigned from the position of
President and CEO of MICT and will continue to serve on the
Company's board of directors.
Commenting on the fundraising and acquisition, Darren Mercer said:
"GFH is the first major step for MICT into the fintech space and
we anticipate that it will soon be followed by further important
partnerships and acquisitions. This successful raising of
substantial new capital in today's extremely adverse market
conditions is testament to the huge potential of GFH as a platform
for MICT's strategy. We believe that the GFH acquisition represents
a unique opportunity for investors to participate in the rapidly
expanding move of China's
burgeoning middle class into financial services. The explosive
growth of stock trading is expected to continue, while the
insurance sector, in which GFH has a number of key commercial
relationships, is developing apace as consumers accelerate their
shift towards transacting via online platforms."
David Lucatz added:
"This transaction is expected to enable the Company to
accelerate its strategy to become a global player in fintech. We
believe that our enlarged resources and team have the experience,
relationships and potential pipeline of deals to provide MICT with
opportunities to significantly increase its earnings, and it is
contemplated that further acquisitions will follow. The board
of MICT is excited to begin this new chapter and we view the
prospects for the Company and its shareholders, existing and new,
with considerable confidence."
About MICT, Inc.
MICT, Inc. (NasdaqCM: MICT) operates through Micronet Ltd.
("Micronet"), a former subsidiary, in which the Company previously
held a majority ownership interest that has since been diluted to a
minority ownership interest. Micronet operates in the growing
commercial Mobile Resource Management (MRM) market, mainly in
the United States. Micronet
designs, develops, manufactures and sells rugged mobile computing
devices that provide fleet operators and field workforces with
computing solutions in challenging work environments.
Through its acquisition of GFH, the Company is pursuing a
strategy to provide a fintech trading platform that represents a
'one-stop-shop' full-service solution to B2C and B2B customers in
China and several other key
markets in the world. The core platform utilizes proprietary
technology to deliver an intuitive and innovative user-experience,
which can be white-labeled by strategic partners and also interface
with other platforms already used by those businesses.
Forward Looking Statements
Note: This press release may contain forward-looking statements
that are being made pursuant to the Private Securities Litigation
Reform Act of 1995, which provides a "safe harbor" for
forward-looking statements to encourage companies to provide
prospective information so long as those statements are accompanied
by meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those
discussed in the statement. Forward-looking statements are subject
to a number of known and unknown risks and uncertainties that could
cause actual results, performance or achievements to differ
materially from those described or implied in the forward-looking
statements, including, but not limited to, general economic and
business conditions; competition in the accessories markets,
potential changes in customer spending; acceptance of product
offerings and designs; the variability of consumer spending
resulting from changes in domestic economic activity; any
significant variations between actual amounts and the amounts
estimated for those matters identified as critical accounting
estimates, as well as other significant accounting estimates made
in the preparation of financial statements; as well as geopolitical
concerns. Accordingly, actual results may differ materially from
such forward-looking statements. You are urged to consider all such
factors. Any forward-looking statements relating to the transaction
discussed above are based on our current expectations, assumptions,
estimates and projections and involve significant risks and
uncertainties, including the many variables that may impact or are
related to consummation of the transaction, SEC regulatory review
of our filings related to the transaction and the continuing
determination of MICT's board of directors that the transaction is
in the best interests of all stockholders. MICT and GFH assume no
obligation for updating any such forward-looking statements to
reflect actual results, changes in assumptions or changes in other
factors affecting such forward-looking statements.
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