The HK$31 million (US$4 million) acquisition by Next Ventures Ltd of a stake in Igloo Finance Ltd comes after Lai acknowledged that he may sell his privately owned assets, including Hong Kong's No 2 newspaper, Apple Daily, to publicly traded Next Media.
Next Media's stock has outpaced other media counters this year, in part because of its Internet exposure. Investors also hope it will acquire the newspaper, newsweekly Next Magazine and other assets from Lai, who gained control of the company, formerly called Paramount Publishing Group, in October.
"I am told that analysts have all been saying that I should inject all the privately owned assets into the listed company," Lai said at a press conference. "If all the analysts have been suggesting it, we should consider it."
A six-month ban on new-share sales by Next Media, imposed by the stock exchange when Lai took over the company, expires next month. Because of the ban, the company canceled a January share sale designed to raise HK$855 million--money it had planned to use to buy Next Magazine from Lai. It already publishes the magazine's Web site.
Lai said he couldn't talk specifically about plans to sell assets to Next Media until the six-month share-sale ban ends.
Next's venture capital unit was set up to provide Internet start-ups with funds until they can sell shares, and provide links to generate interest in Next's own Web sites.
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It will pay for its first acquisition, Igloo, with US$100,000 in cash, US$2.1 million of print advertising and US$1.8 million of Internet advertising and content. Igloo runs the GoHome site, which carries Hong Kong classified property ads.
Next has the option to purchase as much as 12 percent more of Igloo before the company's next round of fund-raising. Apart from Next, Igloo's shareholders include its founders, with a 34 percent stake, and associates with a 19 percent stake.
Lai said classified advertising was a natural for the Internet, and the acquisition fits into his plans to adapt old economy businesses for the new economy. More content from Next publications will make the GoHome site "stickier," holding on to users, he said.
"Venture capital investors in the U.S. have had internal rates of return of over 100 percent," said Terence Ting, chief operating officer at Next Media and managing director of Next Ventures. "We will disappointed if we don't achieve something like this."
Meanwhile, Lai said that his Admart direct-to-home sales chain, started last July, now loses less than HK$20 million a month and will make money by the end of its second year of operation.
Next Media shares rose 3.7 percent to HK$5.55. So far this year, the stock has risen more than five-fold. Oriental Press Group Ltd, the publisher of Hong Kong's No 1 newspaper rose more than three-fold this year. It rose 0.8 percent to HK$3.075 today.
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