The Australian equities market is being offered public investor access to a world-first technology uniting the new wave of e-commerce consumerism sweeping through China.
At the heart of the up to A$2.4 million Initial Public Offer and ASX listing by Shenzhen-based software technologist, TTG, is a recognition of the pace at which more Chinese are gaining access to the Internet and changing and expanding their buying habits.
As a result, TTG, in conjunction with UnionPay Financial Network, has developed the first software able to link card-based transactions by all offline and online market participants, whether consumers, consumer groups, merchants or financial institutions – on one cohesive transaction platform.
The system has the backing under exclusive contract terms, of the world’s largest bank card issuer, China’s UnionPay group.
UnionPay is an organisation of more than 80 of China’s major financial institutions and whose major business is the operation of a cross-bank settlement network under the guidance of the powerful People’s Bank of China.
The proposed Australian listing by TTG on the ASX by December this year is however only offering less than 1% of TTG’s expected A$380 million listing value for free trading in the first year or two post listing.
UnionPay has already rolled out the technology in Shenzhen, a major city in the south of China's Guangdong province and located immediately north of Hong Kong. The area was China's first and one of the most successful Special Economic Zones.
Sydney-based TTG Co-Chairman, Mr Chris Ryan, said todaythat over the next two years, TTG expects UnionPay to progressively rollout the technology across China’s major metropolitan cities, Beijing, Chengdu, Xiamen, Hainan, and Shanghai, followed by regional installations.
Mr Ryan said he understands UnionPay then plans to commence exporting use of the platform to those global destinations most favoured by Chinese tourists – including Australia – by 2013 - while achieving a presence in 150 Chinese cities from 2014 onwards.
“The phenomenon that is China’s emerging consumerism is bringing together three key elements of e-commerce - a rapidly increasing consumer base, an equally rapid expansion of spend per capita, and an evolving definition of who and what the Chinese consumer is,” Mr Ryan said.
“This has presented a very unique business opportunity specific to the sheer size and regime controls within China’s consumer market, bringing singularity to all the vested but historically unlinked stakeholders in that country’s massive and rising volume of e-commerce transactions,” Mr Ryan said.
“While the ASX move is initially a technical compliance listing, TTG does offer major appeal for Australian investors seeking direct participation in arguably not only the world’s most exciting growing consumer market but one evolving a very dynamic shift in the way merchants connect with consumers.
“It is TTG’s belief that this technology will eventually migrate to strategic applications globally.
“Certainly, Chinese merchants are embracing it as the platform shifts significant fixed customer acquisition costs to variable costs. They see this as an effective way to minimise business risk and maximise profits,” Mr Ryan said.
Terms of the Offer
TTG is offering two million CHESS Depositary Interests (CDIs) at A$0.60 per CDI to raise A$1.2 million, with an allowance for oversubscriptions of a further A1.2 million, for a total of four million CDIs.
The minimum application is 3,500 CDIs for a minimum cost of A$2,100.
If fully taken up, including oversubscriptions, the Offer represents 0.6 per cent of TTG’s issued shares of nearly 635 million.
Sydney’s Investorlink Corporate, of which Mr Ryan is an Executive Director, is acting as Advisor to TTG on the Offer with Novus Capital appointed Lead Broker.
The Offer opened this week and closes on 12 November with the Company anticipating listing on the ASX by around 27 November.
“We expect a free float for the first 12 months of the ASX shares on issue to be in the order of 1.5% and the second 12 months of around 2.8% under a deliberate strategy to maintain a very tight equity register while the business completes its two year rollout across mainland China cities,” Mr Ryan said.
“The ASX listing is significant as it establishes an enterprise value for TTG in a market space recognised globally as highly regulated, compliant and efficient - and that will help profile TTG domestically – and the business of TTG is the first to market with its business model so the listing will help establish that in financial markets as well.”
“TTG is well positioned to tap the most significant resource in China, the Chinese consumer,” Mr Ryan said.
The TTG technology
TTG’s core product is an open Application Programming Interface (API) platform called ULPOS, developed in conjunction with UnionPay.
ULPOS allows all market participants to operate on one cohesive platform. Consumers participate by registering through their credit or debit card, getting access to all merchant discounts on the platform.
The system eliminates for the buyer, seller and credit institution involved, much of the historic counterparty payment risks associated with discount sites where counterparties refuse to settle transactions.
ULPOS also consolidates all the product information and expenditure for the consumer, such as warranties, into a digital cloud-connected service and has significant appeal to social media networkers.
TTG’s exclusive long-term contract with UnionPay ensures ULPOS operates across the major cross bank settlement network in China. TTG has developed a technology
called Electronic Financial Authentication which is a key element of the ULPOS platform technology, providing the connecting digital verification link to ensure that all transactions on the ULPOS platform can be settled on a T+1 basis (day after transaction date).
TTG sources its revenue from a share of the card transaction fees and rebates from the merchants who make sales on the ULPOS platform.
TTG’s Board is headed by China-based e-commerce entrepreneur and company founder, Mr Xiong Qiang, with other members in the PRC, Hong Kong and Sydney.
Co-Chairman Chris Ryan 02 9247 9555 / 0439 970 305
Executive Chairman Ross Benson 02 9247 9555 / 0418 254 548
Lead Broker Steve Streeter 02 9375 0100
Partner Kevin Skinner 08 8234 9555 / 0414 822 631