FTFT Stock: Over 10% Increase Pre-Market Explanation

By Amit Chowdhry ● Sep 3, 2021
  • The stock price of Future Fintech Group Inc (NASDAQ: FTFT) increased by over 10% pre-market. This is why it happened.

The stock price of Future Fintech Group Inc (NASDAQ: FTFT) – a leading blockchain-based e-commerce business and a fintech service provider – increased by over 10% pre-market. Investors are responding positively to Future FinTech announcing that on August 30, 2021, the company signed an equity acquisition term sheet to buy 51% of the equity of Shanghai Dianfa Internet Technology Co., Ltd. The term sheet represents terms for a proposed transaction subject to definitive documentation and is non-binding except for its exclusive period and confidentiality; and governing law sections.

According to the term sheet, Future Fintech plans to acquire 51% of the equity of Dianfa Technology at a purchase price of RMB 17.85 million (approximately US$ 2,762,730) of which RMB 6 million (approximately US$ 928,650) will be paid in cash as a capital investment in Dianfa Technology and RMB 11.85 million (approximately US$1,834,080) will be paid in shares of FTFT common stock to the selling shareholders of Dianfa Technology. And the acquisition will be subject to legal and financial due diligence on the part of the company.

Through this deal, FTFT plans to enter the key supply chain finance business of small and medium-sized enterprises and the microfinance sector since these entities are often not able to access bank loans as larger businesses can in China. And as this represents a vast number of enterprises that have ongoing capital needs, the company plans upon developing a financial ecosystem to include financial and lending institutions, merchants, retail businesses, and other supply-side services embedded with financial technology and communications to create a highly evolved and efficient platform to optimize capital flows for SMEs and microfinance companies.

Dianfa Technology is known for providing digital management services and high-frequency small loan assistance services to micro, small and medium-sized businesses and their suppliers based on its innovative smart retail SaaS supply chain system. And Dianfa Technology uses financial technology capabilities like mobile Internet, big data, AI, cloud computing and blockchain analytics to help financial institutions provide low interest collateral-free revolving credit products and services to micro and small merchants across the retail industry business chain to meet their funding needs. These capital needs are often of a “short, small, frequent and urgent” variety and are essential in terms of supporting the operating needs of microbusinesses and small merchants.

KEY QUOTES:

“We estimate that there are millions of microbusinesses in China which represents a tremendous opportunity for digital management, lending and payment processing companies such as Dianfa Technology. Further, we anticipate that this potential acquisition will enhance our competitive advantages as well as create important synergies with our existing capabilities in supply chain finance.”

“In addition, we believe that FTFT’s strong blockchain development capabilities and rich application experience will enable us to evolve Dianfa Technology’s current smart retail SaaS supply chain system to a next business model architecture. With our increasing geographical reach, we foresee the potential to realize decentralized high-frequency small transactions for small and medium sized businesses across the globe.”

“Our goal is to become a leading financial technology company and provide an array of individual and business customers with digital inclusive financial services and in doing so, to maximize returns to our shareholders.”

— Shanchun Huang, CEO of Future FinTech

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.