TIDMIIG
RNS Number : 4731R
Intuitive Investments Group plc
27 October 2023
27 October 2023
This announcement contains inside information for the purposes
of UK Market Abuse Regulation
Intuitive Investments Group plc
("IIG" or the "Company")
Investment in China-based technology company, Hui10 Inc, in
exchange for new shares
Intuitive Investments Group plc (SFM: IIG), the closed-end
investment company, is pleased to announce that it has agreed, at a
valuation of $365 million*, to invest in the entire issued share
capital of Hui10 Inc. ("Hui10") in exchange for the issue of
1,911,529,540 new Ordinary Shares in the Company ("Consideration
Shares") to vendor shareholders of Hui10 (the "Vendor
Shareholders").
This investment is in accordance with the Company's investment
objective and policy and follows the appointment of Sir Nigel Rudd
as Chairman and the Company's move to the Specialist Fund Segment
of the London Stock Exchange's Main Market on 8 August 2023.
Hui10 is a technology company with interests in two operating
businesses involved in transforming the lottery in China. It holds
a 33% share in Beijing Huishi Dehua Information Technology Co., Ltd
("Huishi Dehua") which enables, through its digital based payment
platform, the market expansion of the Chinese lottery. It also owns
60% of Beijing Huishi Chunyuan Technical Development Co., Ltd
("Lucky World") whose omni channel technology platform provides
China's lottery shops access to a wider fast-moving consumer goods
("FMCG") product offering.
Huishi Dehua
Huishi Dehua 's patented technology digitises the method of
playing the lottery via a smartphone, linked to China UnionPay
smart point-of-sale terminals ("POS"). This exclusive payment
platform will allow the country's 1.1 billion adult population
access to play the lottery which currently only reaches an
estimated 100 million users. This platform operates and facilitates
an omni-channel offer including:
-- PELT (Points Exchange Lottery Tickets): a proprietary
digital assets exchange platform, providing third party
loyalty program operators the facility to enable their
members to redeem their points for lottery play.
-- Scratch cards: providing retailers with POS terminal and
APP based tools for the distribution, sales, small prize
settlement and management of scratch cards.
-- Jackpot lottery: providing any merchant with a UnionPay
POS terminal, approved by the lottery issuer, the ability
to process lottery play.
The ability of Huishi Dehua to deliver this transformation is
underpinned by the position it has developed over the past seven
years, including developing copyrighted intellectual property,
integrating its payments platform and establishing a framework of
exclusive agreements across the lottery network, which together,
are expected to enable the business to rapidly expand the lottery
across China.
Lucky World
Lucky World was created to support upwards of 175,000 existing
lottery-only shops grow as lottery distribution expands through
Huishi Dehua. Operating as a 'Lucky World' branded, omni-channel
retail banner for the existing retail lottery network with national
coverage it sells online and instore FMCG to existing regular
lottery customers. Through the platform customers can order goods
online, selecting either for delivery to their local lottery shop
or home. Furthermore, customers purchasing goods receive loyalty
points 'Lucky Beans', which are redeemed in-shop only for free
lottery play, encouraging footfall. Lucky World provides low-cost
efficient payment services to the lottery shopkeeper via UnionPay,
including WeChat Pay and AliPay, for all Lucky World products
offering significant savings on costs, transaction speed, improving
efficiency and valuable data collection.
Value opportunity
Each of the businesses is forecasting significant growth over
the next five years.
Huishi Dehua is aiming to increase the number of lottery enabled
terminals to approximately three million shops and retail outlets
across China, targeting to attract in excess of 400 million
registered lottery users, with over 300 million active players,
representing approximately 30% of the addressable market in China.
As a payment platform the business receives a small share from the
sale of each ticket, therefore this increase in participation
represents a significant opportunity for value growth. This
increased consumer participation would bring the Chinese lottery up
to the lower end of that achieved in more established lottery
markets including North America, Europe and the UK.
Lucky World is focused on connecting the majority of the
existing dedicated lottery only shops to the Lucky World format,
each sale generates a margin for the shop owner as well as Lucky
World, therefore the rollout programme represents a significant
opportunity for shareholder value generation.
As part of the Investment Giles Willits will be joining the
Board of IIG with specific oversight of Hui10. Giles has over 30
years' experience working in senior finance positions, including
over 20 years in executive board positions including Entertainment
One Ltd. a FTSE250 company. Giles invested in Hui10 in 2018.
Sir Nigel Rudd, non-Executive Chairman, said:
" I have had a career of realising shareholder value and believe
the investment into Hui10 represents a transformational opportunity
for the Company. I strongly believe Hui10 has the capability to
return shareholders many times their investment at flotation and
from the current share price. "
The Board of the Company is responsible for making this
notification.
* Valuation based on the audited NAV per Ordinary Share of the
Company as at 31 December 2022 and adjusted for the fundraising as
announced on 11 July 2023
Intuitive Investments Group plc www.iigplc.com
Sir Nigel Rudd, Non-Executive Via FTI Consulting
Chairman
Robert Naylor, CEO
SP Angel Corporate Finance LLP
- Financial Adviser +44 (0) 20 3470 0470
Jeff Keating / David Hignell /
Kasia Brzozowska
FTI Consulting
Jamie Ricketts / Valerija Cymbal IIG@fticonsulting.com
/ Jemima Gurney
Application for admission and total voting rights
Application has been made for the Consideration Shares, which
will rank equally with the existing ordinary shares of 1 pence each
in the Company ("Ordinary Shares") of the Company, to be admitted
to trading on Specialist Fund Segment of the Main Market, becoming
effective in accordance with the admission and disclosure standards
of the London Stock Exchange. It is expected that admission will
become effective and dealings in Consideration Shares will commence
at 8:00 a.m. on or around 31 October 2023 ("Admission").
Following Admission, the Company's issued share capital will
consist of 1,998,389,184 Ordinary Shares. Since the Company
currently holds no shares in treasury, the total number of voting
rights in the Company will be 1,998,389,184. Shareholders may use
this figure as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change to their interest in, the Company under the FCA's
Disclosure Guidance and Transparency Rules.
About Intuitive Investments Group plc
IIG is an investment company seeking to provide investors with
exposure to a portfolio concentrating on fast growing and/or high
potential Life Sciences and Technology businesses operating
predominantly in the UK, continental Europe, the US and APAC,
utilising the Board's experience to seek to generate capital growth
over the long term for shareholders.
THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR RELEASE,
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ZEALAND, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER
JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION
WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION,
OFFER OR ADVICE TO ANY PERSON TO PURCHASE AND/OR SUBSCRIBE FOR,
OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN INTUITIVE
INVESTMENTS GROUP PLC OR ANY OTHER ENTITY IN ANY JURISDICTION.
NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL
FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY
INVESTMENT DECISION IN RESPECT OF INTUITIVE INVESTMENTS GROUP
PLC.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (596/2014/EU) AS THE
SAME HAS BEEN RETAINED IN UK LAW AS AMED BY THE MARKET ABUSE
(AMMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR").
IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN
IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED WITHIN THIS
ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF
INSIDE INFORMATION (AS DEFINED UNDER UK MAR). UPON THE PUBLICATION
OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THOSE
PERSONS THAT RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE
NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION, WHICH IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
The Specialist Fund Segment is intended for institutional,
professional, professionally advised and knowledgeable investors
who understand, or who have been advised of, the potential risk
from investing in companies admitted to the Specialist Fund
Segment. The Specialist Fund Segment is only suitable for
investors: (i) who understand the potential risk of capital loss
and that there may be limited liquidity in the underlying
investments of the Company; (ii) for whom an investment in
securities admitted to trading on the Specialist Fund Segment is
part of a diversified investment programme; and (iii) who fully
understand and are willing to assume the risks involved in such an
investment portfolio.
Background
Hui10 Overview
Hui10 is a China based technology company with interests in:
-- Beijing Huishi Dehua Information Technology Co., Ltd ("Huishi
Dehua") in which Hui10 owns 33%, which is a technology
business that is transforming the Chinese lottery; and
-- Beijing Huishi Chunyuan Technical Development Co., Ltd
("Lucky World") in which Hui10 owns 60% of the business:
a company rolling out an omnichannel technology platform
that will transform approximately 175,000 dedicated lottery
only shops in China expanding their offering to include
fast-moving consumer goods("FMCG") .
Huishi Dehua is enabling the transformation and market expansion
of terrestrial lottery play across China. Its patented technology
digitises the method of playing lottery via a smartphone, linked to
China UnionPay smart point-of-sale terminals ("POS"). This
exclusive payment platform will allow the country's 1.1 billion
adult population access to play the lottery in China which
currently only reaches an estimated 100 million users. China
UnionPay is a Chinese state-owned financial services corporation
which provides bank card services and is the world's largest card
payment processing organisation.
Huishi Dehua's technology platform operates and facilitates the
following omnichannel activities :
-- PELT (Points Exchange Lottery Tickets), a proprietary
digital assets exchange platform, providing third party
loyalty program operators the facility to enable their
members to redeem their points for lottery play. PELT
customers are businesses operating their own loyalty programmes
including retail banks, travel agents, airlines, supermarket
chains and telecoms companies.
-- Scratch cards, providing retailers with POS terminal and
APP based tools for the distribution, sales, small prize
settlement and management of scratch cards.
-- Jackpot lottery which provides any merchant with a UnionPay
POS terminal, approved by the lottery issuer, the ability
to process lottery play.
The ability of Huishi Dehua to deliver this transformation is
underpinned by the position it has developed over the past seven
years, including developing copyrighted intellectual property,
integrating payments platform and establishing a framework of
exclusive agreements across the lottery network, which together are
expected to enable the business to rapidly expand the lottery
across China.
Lucky World was created to help upwards of 175,000 existing
lottery-only shops grow as lottery distribution expands through
Huishi Dehua. Lucky World will transform the existing retail
lottery network into a 'Lucky World' branded and omnichannel retail
banner with national coverage selling online and instore FMCG to
the approximately 100 million existing regular lottery customers,
whilst also targeting a wider customer base within the adult
population via Douyin (TikTok) and Weixin (WeChat). Hui10 expect to
roll out nationwide in 2024.
Lucky World's principal activities include t he Lucky World
platform that enables the shopkeeper to sell FMCG to their
customers. Lucky World also has supply chain logistics arrangements
provided by JingDong (JD.com) under a white label contract. JD.com
provides over 20,000 FMCG to the platform. Through the platform
customers can order goods online, selecting either for delivery to
their local lottery shop or home. Furthermore, customers purchasing
goods receive loyalty points 'Lucky Beans', which are redeemed
in-shop only for free lottery play, encouraging footfall. Lucky
World provides low-cost efficient payment services to the lottery
shopkeeper via UnionPay, including WeChat Pay and AliPay, for all
Lucky World products offering significant savings on costs,
transaction speed, improving efficiency and valuable data
collection.
Opportunity
Each of the businesses is forecasting significant growth over
the next five years. Huishi Dehua is aiming to increase the number
of lottery enabled terminals to approximately three million in
shops and retail outlets across China, targeting to attract over
400 million registered lottery users, with 300 million active
players, representing over 30% of the addressable market in China.
As a payment platform the business gets a small share from the sale
of each ticket and as such this volume of participation represents
a significant opportunity for value growth. If achieved these
targets would bring the China lottery participation levels to the
lower end of the range of levels that are achieved in most
established lottery markets including North America, Europe and the
UK. Lucky World is focused on converting the majority of these to
the Lucky World format while expanding the range of FMCG stock
keeping units ("SKUs") they can offer to the established customer
base. Each sale generates a margin for the shop owner and Lucky
World. As such this rollout programme represents a significant
opportunity for shareholder value generation.
Current Trading
As at the end of September 2023 Hui10 had the following
activities.
Huishi Dehua operates in 273 non-lottery shops selling UnionPay
scratch cards. In addition, PELT has over 57,000 registered users
redeeming lottery tickets for loyalty points through a trial with
UnionPay. The business is also working on near term initiatives to
extend the number of shops operating lottery terminals and deliver
a rapid expansion of the PELT offering.
There are currently 53 shops operating Lucky World, as the
business undertakes promotional activity with both Lucky World
branded merchandise and FMCG goods supplied by third parties. To
date, the promotions have been well received generating positive
customer and lottery shop owner feedback. It is planned to continue
to roll out stores and expand the SKU offering while further
developing strategic relationships with specific suppliers of FMCG
goods.
Hui10 Board
Frank Li, co-founder and co-CEO
Frank is co-founder of Hui10, which he established in 2014
together with Daniel Levine. Prior to this he was general manager
of Innovative World Technologies team which he transformed into a
SaaS company, working with China Welfare Lottery Issuance and
Management Centre. Frank's background is working in technology
based businesses including Oracle and Starcom Co., Ltd. Frank
graduated from the School of Electronic Engineering, Beijing Union
University, majoring in radio engineering.
Daniel Levine, co-founder and co-CEO
Daniel is co-founder of Hui10. Prior to this he worked with the
Innovative World Technologies team focused in the
telecommunications sector, and which developed solutions for China
Welfare Lottery. In 2006 Daniel founded Assist in China Ltd, with
the purpose of supporting individuals and companies operating
business with, or in China, guiding them through complex and
unfamiliar environment. During this period, Daniel supported Frank
in completing the successful IPO for Innovative World Technologies
on China's 3(rd) board, the NEEQ Stock Exchange.
Harry Willits, non-executive director and General Counsel
Harry is general counsel of Allwyn Entertainment Limited the
incoming operator of the fourth National Lottery. Previously he has
held positions as general counsel at William Hill and Gala Coral
Group (now part of Entain plc). Harry has been an investor in Hui10
since 2017 and a Director since March 2017.
Stephen Freear, independent non-executive director of Hui10
Stephen has 30 years' experience as a banker, starting at
Barclays in 1985 in commercial banking before moving into
investment banking in 1989. He is a specialist in Asian equities,
derivative and convertible bonds. Stephen has spent the majority of
his career working at Normura International and MUFG, Hong Kong
office. At MUFG, he was managing director, head of equities and
derivatives and member of management committee of MUFG London. From
2018 to 2022 Stephen was a consultant to Premier League football
club Crystal Palace.
Li Feng, independent non-executive director of Hui10
From 2018 Li Feng has been Secretary-general of Bejing Yigong
Public Welfare Foundation and general manager of Future Famous
(Beijing) Education Technology Co., Ltd. Prior to this he was
general manager of the medical health and cultural tourism
department of PingAn Bank. Previously Li Feng was a director of
product research and development, department of retail banking,
head office of PingAn Bank Prioer to this Li Feng was president of
Zizhu, sub-branch of Beijing branch, China Minsheng Bank.
In addition, as part of the investment Giles Willits will be
joining the Board of IIG with specific oversight of Hui10. Giles
has over 30 years' experience working in senior finance positions,
including over 20 years in executive board positions including
Group CFO at IG Design Group plc an AIM50 company, and
Entertainment One Ltd. a FTSE250 company. Giles was previously
Director of Group Finance at J Sainsbury's plc, FTSE100 and is a
qualified Chartered Accountant. Specific to Hui10, Giles invested
in Hui10 in 2018 and since then has been advising the business.
Directors' shareholdings in the Company
The table below summarises the Ordinary Shares held by the
Directors of Hui10 Board further to Admission.
Name Number of Percentage of Share
Ordinary Shares Capital further
to Admission
Frank Li 360,156,839 18.0%
----------------- --------------------
Daniel Levine 111,110,528 5.6%
----------------- --------------------
Harry Willits 21,696,836 1.1%
----------------- --------------------
Stephen Freear 7,087,434 0.4%
----------------- --------------------
Li Feng 11,860,178 0.6%
----------------- --------------------
In addition to the Hui10 Board the business currently has 42
employees located across seven offices (Beijing, Handan, Taiyuan,
Jinan, Jiu Jiang, Shi Jiazhuang and ShenZhen) in China. The main
functions of the team cover operations, marketing and finance. The
Hui10 senior management team is highly experienced with a proven
track record and unique expertise in platform infrastructure,
lottery operations and the Chinese regulatory environment. As part
of the expected expansion of the business over the next three years
the team is forecast to grow to over 350 in China.
Hui10 Background Information
Hui10, is a company incorporated in the Cayman Islands on 28
January 2015. Its LEI company number is 296186 and its registered
office is Sertus Incorporations (Cayman) Limited, Sertus Chambers,
Governors Square, Suite #5-204, 23 Lime Tree Bay Avenue, P.O. Box
2547, Grand Cayman, Kyl-1104, Cayman Islands. The Company's Head
Office is based in China at 18, Zhongguancun Internet Creative
Cultural Ind. Park Fuwai Liangjiadian 1, Haidian District, Beijing
100142, PRC. Further information can be seen at www.hui10inc.com
.
Financial information
The summary financial information for Hui10 for the two years
ended 31(st) December 2022 is below.
2022 2021
RMB '000 RMB '000
Revenue 1,826 1,723
---------- ----------
Loss before tax (Continuing Operations) (34,967) (19,537)
---------- ----------
In the year to 30 September 2023 the business has generated
revenues of RMB 358,744.
Hui10 share growth incentive scheme
The success of the investment will depend on the performance of
key employees and advisers in executing and supporting the growth
strategy. Hui10 will establish equity-based incentive arrangements
which will be an important means of motivating key employees,
consultants and advisers, and which will align with the interests
of shareholders. Hui10 will create a scheme in which participants
are only rewarded if a predetermined level of shareholder value is
created over a three to five year period or upon a change of
control of the Hui10 (whichever occurs first). The reward will be
calculated on a formula basis by reference to the growth in market
capitalisation of Hui10 over and above the value of US$365,000,000.
It will allow for adjustments for the issue of any new Ordinary
Shares and taking into account dividends and capital returns
("Shareholder Value"). As Hui10 is not a listed company the
calculation of Shareholder Value will be based on the lower of a
15x multiple of Adjusted EBITDA and the market capitalisation of
IIG (or in the event of a change of control of Hui10, the valuation
of Hui10).
The reward will be realised by the exercise by the beneficiaries
of a put option in respect of a new class of Hui10 shares and
satisfied either in cash or by the issue of new Ordinary Shares, at
the election of the Company. Under these arrangements in place,
participants are entitled up to in total 15% ("Incentive Pool") of
the Shareholder Value created, subject to such Shareholder Value
having increased by at least 25% per annum compounded over a period
of between three and five years from the Investment date or
following a change of control of the Company. To implement the
Incentive Scheme, Hui10 has approved the creation of a new share
class. The new share class does not have voting or dividend
rights.
The beneficiaries in the Incentive Scheme will include the
following;
Percentage of Share
Incentive Pool
Daniel Levine (including Frank Li) 6.3%
--------------------
Harry Willits 2.4%
--------------------
Giles Willits 2.4%
--------------------
Stephen Freear 0.3%
--------------------
The remaining 3.6% of the Incentive Pool has/will be allocated
amongst senior employees and certain advisers to Hui10 Inc.
Major shareholders
The Company is aware of the following persons who, directly or
indirectly will have an interest in 3% or more of the voting rights
of the Company's issued Ordinary Share capital further to
Admission:
Name Number of Percentage of Share
Ordinary Shares Capital
Frank Li Tong 360,156,839 18.0%
----------------- --------------------
Coral Group Trading Limited 216,448,245 10.8%
----------------- --------------------
Hingap Limited 189,762,845 9.5%
----------------- --------------------
Peter Kershaw 165,457,343 8.3%
----------------- --------------------
Knarfil International Limited 143,041,916 7.2%
----------------- --------------------
Zhixing Glabal Investments Limited 118,601,778 5.9%
----------------- --------------------
Daniel Levine 111,110,528 5.6%
----------------- --------------------
Wealth Chance Investment Group 87,265,857 4.4%
----------------- --------------------
Affinity Trustees Limited/Philippe
Jabre 68,548,642 3.4%
----------------- --------------------
Summary of the sale and purchase agreement
All of the Vendor Shareholders of Hui10 have entered into a
share sale and purchase agreement with IIG agreeing to sell the
whole of the share capital of Hui10 in exchange for the issue of
shares in IIG. Following completion of the sale and issue of the
Consideration Shares, the Vendor Shareholders of Hui10 will hold
95.7% of the issued share capital of IIG.
Each of the Vendor Shareholders have provided warranties
relating to their ownership of Hui10 shares and authority to sell
the shares to IIG. Commercial and tax warranties have been granted
by the Company and each of Daniel Levine and Frank Li (the
"Executives"). IIG is also able to rely on the information in a
Legal Due Diligence Report addressed to IIG and prepared by Han Kun
Law, the legal advisors to Hui10. Certain Vendor Shareholders
including Frank Li, Daniel Levine, Harry Willits and Coral Group
Trading Limited have entered into 12-month lock-in and 12-month
orderly market agreements.
Investment Terms Agreement
Hui10, IIG and the Executives have also entered into and
Investment Terms Agreement ("Investment Terms Agreement")
supporting IIG's investment into Hui10. Hui10 has undertaken to
provide certain financial and other information to IIG and require
IIG consent before taking certain actions and decisions. The
Company has the right to appoint two observes to attend board
meetings of Hui10 and receive information relating to other
companies and investment in the Hui10 group. Giles Willits has been
appointed an observer for the Company. Hui10 has the right to
appoint one observer to attend IIG Board Meetings. The Executives
have entered into restrictive covenants in the Investment Terms
Agreement undertaking not to compete with the Company for a period
in the event they cease to be employees of Hui10.
Related party transactions
The Company is not required to comply with the provisions of
Chapter 11 of the Listing Rules regarding related party
transactions. The Company has, however, adopted a related party
policy which shall apply to any transaction which it may enter into
with any Director or any of their affiliates, which would
constitute a "related party transaction" as defined in, and to
which would apply, Chapter 11 of the Listing Rules. In accordance
with its related party policy, the Company shall not enter into any
such related party transaction without first obtaining the approval
of a majority of the Directors who are independent of the relevant
related party.
The Chairman holds 1,500,000 ordinary shares in Hui10 which will
become 17,790,271 Ordinary Shares in the Company on Admission.
Furthermore, the Chairman is interested in a warrant issued by
Hui10 as more fully described below. The independent Directors,
which is the entire Board, except for the Chairman, unanimously
approved the Investment.
Giles Willits, who will join the board of the Company holds
163,572 ordinary shares in Hui10 which will become 1,939,997
Ordinary Shares in the Company on Admission. He is also a
participant in the Hui10 Share Incentive Growth Scheme described
above.
Warrants in the Company and Hui10
Conditional on Admission, the Company has executed a warrant
instrument and issued 39,967,785 warrants to Mannerston Investments
Limited, a company in which David Evans has a significant interest.
Each Warrant entitles the warrant holder to subscribe for one
Ordinary Share at an exercise price of 15.6632 pence during the
period commencing on 31 October 2023 and ending on the tenth
anniversary and are conditional on the share price reaching 31.3264
pence. Once this condition has been satisfied, the Warrant is
regarded as vested and may be exercised at any time thereafter,
even if the IIG share price subsequently falls below 31.3264 pence
per share. Full exercise of the subscription rights under the
Warrants will result in the issue of 39,967,785 new Ordinary
Shares.
Conditional on Admission, Hui10 executed a warrant instrument
and issued 1,658,956 warrants to the Chairman and an aggregate of
1,658,956 additional warrants to certain connected parties. Each
warrant entitles the warrant holder to subscribe for one Class B
share in Hui10 at an exercise price of GBP1.8868. Exercise of the
Warrants is subject to satisfaction of a vesting condition being
the closing price of the shares in IIG being equal to or more than
31.3264 pence per share. Once this condition has been satisfied,
the Warrant is regarded as vested and may be exercised at any time
thereafter, even if the IIG share price subsequently falls below
31.3264 pence per share. In the event that Hui10 declares any
dividend on the Ordinary Shares, it is obliged to accrue a pro rata
amount in respect of a notional dividend on the B Shares. Such
accrued notional dividend may be used by the Warrantholder towards
payment of the subscription price on the exercise of the
Warrants.
Each of the Warrantholders are intending to enter into, a put
and call option agreement with IIG, entitling the Warrantholders to
require IIG to acquire the Class B Shares issued in Hui10 on
exercise of the Warrants in exchange for the issue of an aggregate
of 39,967,785 new Ordinary Shares for all of the Class B Shares in
issue in Hui10. IIG has the right to choose whether to issue shares
or to pay cash on the exercise of the put or call option. The
Warrantholders have a period of 30 days to exercise their put
option. If the put option is not exercised by a Warrantholder
within 30 days, IIG may exercise its call option to acquire the
Class B shares in exchange for the issue of IIG shares or payment
in cash, at its discretion.
Accounting treatment of the Investment
The Board of Directors, in consultation with its advisers, has
assessed IIG as meeting the definition of an investment entity as
per IFRS 10 Consolidated Financial Statements requirements.
Therefore, Hui10 will be held at fair value on IIG's balance sheet
and any revaluation will be shown through its profit or loss in
accordance with IFRS 9 Financial Instruments. Hui10 will not be
consolidated as a subsidiary of IIG.
Proposed consolidation of the Ordinary Shares
It is the intention of the Company to consolidate the Ordinary
Shares by issuing one new ordinary share for every ten existing
Ordinary Shares at the Company's next Annual General Meeting
expected to be held in January 2024.
Investment Policy
The Company's investment policy is focussed on fast growing and
high potential life sciences, healthcare and technology businesses
operating predominantly in the UK, continental Europe, the US and
APAC. The Company's share issuance authorities allows for up to 3.7
billion new Ordinary Shares to be issued in consideration for
assets, as set out in the Company's prospectus and circular to
shareholders dated 11 July 2023.
END
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