Vala Inc. - Proxy Solicitation & Information Statement 2020

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your Shares in 51 Credit Card Inc. (the ‘‘Company’’), you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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51 CREDIT CARD INC. 51 信用卡有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2051)

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE DEEMED DISPOSAL OF INTEREST IN THE TARGET COMPANY

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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A letter from the Board is set out on pages 6 to 25 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 26 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 27 to 42 of this circular.

A notice convening the EGM to be held at United Conference Centre, 10/F., United Centre, 95 Queensway, Admiralty, Hong Kong on Friday, 29 May 2020 at 11:15 a.m. is set out on pages 49 to 50 of this circular. A form of proxy for use at the EGM is enclosed with this circular.

Whether or not you are able to attend the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same as soon as possible and in any event not later than 48 hours (excluding any part of a day that is a public holiday) before the time appointed for holding of the EGM or any adjournment thereof to the Company’s Hong Kong share registrar, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong. Completion and return of the form of proxy will not preclude you from attending and voting at the EGM or any adjournment thereof should you so wish.

PRECAUTIONARY MEASURES FOR THE EGM

Please see page 1 of this circular for precautionary measures being taken to try to prevent and control the spread of the Novel Coronavirus (COVID-19) at the EGM, including:

– compulsory body temperature checks and health declarations – wearing of surgical face masks

– no refreshment will be served, and there will be no corporate gift

Any person who does not comply with the precautionary measures or is subject to any Hong Kong Government prescribed quarantine may be denied entry into the EGM venue. The Company will require all attendees to wear surgical face masks before they are permitted to attend, and during their attendance of the EGM at all times, and reminds the Shareholders that they may appoint the chairman of the EGM as their proxy to vote on the relevant resolution(s) at the EGM as an alternative to attending the EGM in person.

11 May 2020

	Page
PRECAUTIONARY MEASURES FOR THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . .	26
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . .	27
APPENDIX I – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	43
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	49

– i –

PRECAUTIONARY MEASURES FOR THE EGM

In view of the ongoing Novel Coronavirus (COVID-19) pandemic and recent guidelines for prevention and control of its spread, the Company will implement the following precautionary measures at the EGM to protect the Shareholders, staff and other stakeholders who attend the EGM from the risk of infection:

(i) compulsory body temperature checks will be conducted for every Shareholder, proxy or other attendee at each entrance of the EGM venue. Any person with a body temperature of over 37.4 degrees Celsius may be denied entry into the EGM venue or be required to leave the EGM venue;
(ii) each attendee may be asked whether (a) he/she travels outside of Hong Kong within the 14-day period immediately before the EGM; and (b) he/she is subject to any Hong Kong Government prescribed quarantine. Anyone who responds positively to any of these questions may be denied entry into the EGM venue or be required to leave the EGM venue;
(iii) the Company will require all attendees to wear surgical face masks before they are permitted to attend, and during their attendance of the EGM at all times, and to maintain a safe distance between seats; and
(iv) no refreshment will be served at the EGM, and there will be no corporate gift.

Any person who does not comply with above requirements may be denied entry into the EGM venue or be required to leave the EGM venue. To the extent permitted under law, the Company reserves the right to deny entry into the EGM venue or require any person to leave the EGM venue in order to ensure the safety of other attendees at the EGM. In our case, denied entry to the EGM venue also means that person will not be allowed to attend the EGM.

In the interest of all stakeholders’ health and safety and in accordance with recent guidelines for prevention and control of the spread of COVID-19, the Company reminds all Shareholders that physical attendance in person at the EGM is not necessary for the purpose of exercising voting rights. As an alternative, the Shareholders may complete the proxy forms and appoint the chairman of the EGM as their proxy to vote on the relevant resolutions at the EGM instead of attending the EGM in person.

The proxy forms were despatched to the Shareholders together with this circular, and can otherwise be downloaded from the websites of the Company at www.u51.com or the Stock Exchange at www.hkexnews.hk. If you are not a registered Shareholder (i.e. if your Shares are held via banks, brokers, custodians or Hong Kong Securities Clearing Company Limited), you should consult directly with your banks, brokers or custodians (as the case may be) to assist you in the appointment of proxy.

If you have any question relating to the EGM, please contact the Company’s Hong Kong share registrar, Tricor Investor Services Limited, via the following:

Address: Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong Email: [email protected] Telephone: +852 2980 1333 Fax: +852 2810 8185

– 1 –

DEFINITIONS

In this circular, the following expressions have the following meanings unless the context requires otherwise:

‘‘associates’’associates’’’’
‘‘associates’’associates’’’’ has the same meaning ascribed to it under the Listing Rules ‘‘Board’’ the board of Directors
‘‘Business Day(s)’’ day(s) (other than Saturdays, Sundays and public holidays in the PRC) on which banks in the PRC are open for general banking business
‘‘Company’’
51 Credit Card Inc., a company incorporated in the Cayman Islands with limited liabilities and the Shares of which are listed on the Stock Exchange
‘‘connected person(s)’’
has the meaning ascribed to it under the Listing Rules
‘‘Consideration’’ the total consideration, being the sum of the First Investment Consideration and the Second Investment Consideration, for the Investments pursuant to the Investment Agreement
‘‘Deemed Disposal’’ the deemed disposal of the Company’s interest in the Target Company as a result of the Investment Agreement and the Proposed Transactions
‘‘Director(s)’’ the director(s) of the Company
‘‘EGM’’
the extraordinary general meeting of the Company to be convened on 29 May 2020 to approve, among other things, the Investment Agreement and the Proposed Transactions
‘‘Existing Target Company Shareholders’’

Hangzhou Jiahao, Tianjin Lance and Hangzhou Lanpeng

‘‘First Completion’’
completion of the First Investment pursuant to the Investment Agreement
‘‘First Investment’’
the first investment in the Target Company by the Subscribers in the amount of RMB20,000,000 pursuant to the Investment Agreement, please refer to the section headed ‘‘The First Investment’’ as set out in the letter from the Board of this circular for further details
‘‘First Investment Consideration’’
the aggregate investment amount by the Subscribers under the First Investment, being RMB20,000,000
‘‘Group’’
the Company and its subsidiaries

– 2 –

DEFINITIONS

‘‘Hangzhou Jiahao’’
‘‘Hangzhou Lanpeng’’
‘‘Hangzhou Zhenniu’’
‘‘Hong Kong’’
‘‘Independent Board Committee’’
‘‘Independent Financial Adviser’’ or ‘‘Rainbow Capital’’
‘‘Independent Shareholders’’
‘‘Independent Third Party(ies)’’
‘‘Investment Agreement’’

Hangzhou Jiahao Technology Co., Ltd.* 杭州嘉好科技有限公司, a company incorporated in PRC with limited liability, which entered into Shareholders’ Arrangements and an entity wholly controlled by the Group

Hangzhou Lanpeng Enterprise Management Consulting Partnership (Limited Partnership)* 杭州藍鵬企業管理諮詢合夥企業（有限合夥）, a company incorporated in PRC with limited liability and an Independent Third Party
Hangzhou Zhenniu Information Technology Co., Ltd.* 杭州振牛信息科技有限公司, a company incorporated in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
the Hong Kong Special Administrative Region of the PRC

the independent board committee of the Board, comprising Mr. Wong Ti, Mr. Ye Xiang and Mr. Xu Xuchu, being the independent non-executive Directors, established to advise the Independent Shareholders on the Investment Agreement and the Proposed Transactions

Rainbow Capital (HK) Limited, a corporation licensed under the SFO to carry out type 6 (advising on corporate finance) regulated activity, the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in relation to the Investment Agreement and the Proposed Transactions

the shareholders of the Company, other than (i) Mr. Sun, Ms. Zou Yunli, Mr. Zhu and their respective associates; and (ii) those who are required to abstain from voting at the EGM to be convened to approve the Investment Agreement and the Proposed Transactions
an individual(s) or a company(ies) who or which is/are independent of and not connected with the Company as far as the Directors are aware after having made all reasonable enquiries as set out in the Listing Rules
the agreement dated 14 April 2020 entered into between the Subscribers, the Target Company, Hangzhou Jiahao, Tianjin Lance, Mr. Sun, Hangzhou Lanpeng and Hangzhou Zhenniu in relation to the Investments

– 3 –

DEFINITIONS

‘‘Investments’’
the First Investment and the Second Investment to be made by the Subscribers pursuant to the Investment Agreement
‘‘Latest Practicable Date’’
6 May 2020, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular
‘‘Listing Rules’’
the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time
‘‘Mr. Sun’’
Mr. Sun Haitao, the chairman, the chief executive officer of the Company and an executive Director
‘‘Mr. Zhu’’ Mr. Zhu Jianfei, a senior management of the Company
‘‘PRC’’ the People’s Republic of China
‘‘Proposed Transactions’’ transactions contemplated under the Investment Agreement
‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘Second Completion’’
completion of the Second Investment pursuant to the Investment Agreement
‘‘Second Investment’’
the second investment in the Target Company by the Subscribers in the amount of RMB20,000,000 pursuant to the Investment Agreement, please refer to the section headed ‘‘The Second Investment’’ as set out in the letter from the Board of this circular for further details
‘‘Second Investment Consideration’’
the aggregate investment amount by the Subscribers under the Second Investment, being RMB20,000,000
‘‘Shareholders’ Arrangements’’
certain shareholders arrangements have been entered into between Hangzhou Jiahao, Hangzhou Zhenniu, Mr. Zhu and Mr. Guan Jun to set out the commercial agreements in relation to, among others, the management of and the distribution of profits of Hangzhou Jiahao, such that Hangzhou Jiahao is wholly controlled by the Group as to voting rights and economic interest
‘‘SFO’’
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as amended from time to time

– 4 –

DEFINITIONS

‘‘Share(s)’’
ordinary share(s) of US$0.00001 each in the capital of the Company
‘‘Shareholder(s)’’ holders of Share(s)
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘Subscriber A’’
Shenzhen Tiantu Xingshen Tianshi Venture Investment Partnership (Limited Partnership)* 深圳天圖興深天使創業投資合夥企業（有限合夥）, a company incorporated in PRC with limited liability, being a connected person to the Company
‘‘Subscriber B’’ Hangzhou Yunzhuo Phase II Investment Partnership Enterprise (Limited Partnership)* 杭州雲卓二期投資合夥企業（有限合夥）, a company incorporated in PRC with limited liability, being an Independent Third Party
‘‘Subscriber C’’ Ningbo Meishan Bonded Port Zone Ceran Investment Management Partnership Enterprise (Limited Partnership)* 寧波梅山保稅港區策然投資管理合夥企業（有限合夥）, a company incorporated in PRC with limited liability, being an Independent Third Party
‘‘Subscriber D’’ Hangzhou Yiqilaidian Investment Partnership Enterprise 一
(Limited Partnership)* 杭州起來電投資合夥企業（有限合夥）, a company incorporated in PRC with limited liability, being an Independent Third Party
‘‘Subscribers’’ together, Subscriber A, Subscriber B, Subscriber C and Subscriber D
‘‘Target Company’’ Hangzhou Lanye Network Technology Co., Ltd 杭州藍頁網絡技術有限公司, a company incorporated in PRC with limited liability and an indirect non-wholly owned subsidiary of the Company as at the Latest Practicable Date
‘‘Tianjin Lance’’
Tianjin Lance Business Management Consulting Partnership (Limited Partnership)* 天津藍策企業管理諮詢合夥企業（有限合夥）, an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date
‘‘USD’’
United State dollars, the lawful currency in the United States of America
‘‘%’’
per cent
For identification and translation purposes only.

– 5 –

LETTER FROM THE BOARD

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51 CREDIT CARD INC. 51 信用卡有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2051)

Executive Directors:

Mr. Sun Haitao (Chairman and Chief Executive Officer) Mr. Yang Yuzhi (Vice-president) Mr. Zhao Ke (Chief Financial Officer)

Non-executive Director: Ms. Zou Yunli

Independent Non-executive Directors: Mr. Wong Ti Mr. Ye Xiang Mr. Xu Xuchu

Registered office: Second Floor, Century Yard Cricket Square, P.O. Box 902 Grand Cayman, KY1-1103 Cayman Islands

Principal place of Business in Hong Kong: Unit 1006, 10th Floor Tower One, Lippo Centre 89 Queensway Hong Kong 11 May 2020

To the Shareholders

Dear Sirs or Madams,

DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO

THE DEEMED DISPOSAL OF INTEREST IN THE TARGET COMPANY

INTRODUCTION

The purpose of this circular is to provide you with (i) further information on the details of the Investment Agreement and the Proposed Transactions; (ii) the letter from the Independent Board Committee to the Independent Shareholders; (iii) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) other information as required under the Listing Rules.

Reference is made to the announcement of the Company dated 14 April 2020 in relation to, inter alia, the First Investment and the Second Investment.

– 6 –

LETTER FROM THE BOARD

On 14 April 2020 (after trading hours), the Subscribers, the Target Company, the Existing Target Company Shareholders, Mr. Sun and Hangzhou Zhenniu entered into the Investment Agreement, pursuant to which the Subscribers have conditionally agreed to invest and the Target Company conditionally agreed to issue additional registered capital of RMB2,633,742 at a total consideration of RMB40,000,000 in cash, of which RMB2,633,742 as additional registered capital of the Target Company and RMB37,366,258 as additional capital reserve of the Target Company, by way of the First Investment and the Second Investment. The additional registered capital represents approximately 16.67% equity interest in the enlarged registered capital of the Target Company after the First Completion and the Second Completion. Upon the First Completion and the Second Completion, the Target Company shall continue to be a subsidiary of the Company. Set out below are the principal terms of the Investment Agreement.

Set out below are the simplified shareholding structures of the Target Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Investments:

As at the Latest Practicable Date:

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----- Start of picture text -----

The Company
100.0% (1)
(1)(2)
Hangzhou Zhenniu
(3)
100.0%
control via
Shareholders’
Arrangements (2)
Hangzhou Jiahao (2) Tianjin Lance (3) Hangzhou Lanpeng
69.62% 24.68% 5.70%
The Target Company
----- End of picture text -----

(Registered capital: RMB13,168,724)

– 7 –

LETTER FROM THE BOARD

Immediately after completion of the Investments:

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----- Start of picture text -----

The Company
100.0% (1) 100.0% (3)
Hangzhou Zhenniu (1)(2)
control via
Shareholders’
Arrangements (2)
Hangzhou Tianjin Hangzhou Subscriber Subscriber Subscriber Subscriber
Jiahao (2) Lance (3) Lanpeng A(4) B C D
58.02% 20.57% 4.74% 12.50% 1.25% 1.46% 1.46%
The Target Company
----- End of picture text -----

(Registered capital: RMB15,802,466)

Notes:

(1) Hangzhou Zhenniu is an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date.
(2) As at the Latest Practicable Date, Hangzhou Jiahao was owned as to approximately 95.0% and 5.0% by Mr. Zhu and Mr. Guan Jun, respectively. Hangzhou Zhenniu entered into the Shareholders’ Arrangements with Hangzhou Jiahao, Mr. Zhu and Mr. Guan Jun in August 2019, pursuant to which the Group has the power and ability to control the business as well as the economic benefits of Hangzhou Jiahao. The Shareholders’ Arrangements, taken as a whole, enables the results and financial operations of Hangzhou Jiahao to be consolidated into the Group, as if it were the Company’s subsidiary resulting in all economic benefits of its business flowing to the Company. Through the appointment of senior management of Hangzhou Jiahao, the Company believes that Hangzhou Zhenniu is able to effectively supervise, manage and operate the business operations, expansion plans, financial policies and assets of Hangzhou Jiahao, and at the same time, ensure due implementation of the Shareholders’ Arrangements.
(3) Tianjin Lance is an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date.
(4) The ultimate beneficial owner of the Subscriber A, Mr. Wang Yonghua (a substantial Shareholder) is deemed to be interested in approximately 12.90% of the issued share capital of the Company as at the Latest Practicable Date.
(5) The Shareholders’ Arrangements in connection with Hangzhou Jiahao shall remain effective after completion of the Investments.

– 8 –

LETTER FROM THE BOARD

THE INVESTMENT AGREEMENT

Date

14 April 2020 (after trading hours)

Parties

(1) the Subscribers;
(2) the Target Company;
(3) the Existing Target Company Shareholders;
(4) Mr. Sun; and
(5) Hangzhou Zhenniu

Consideration

The First Investment Consideration and the Second Investment Consideration shall be RMB20,000,000 each and RMB40,000,000 in aggregate, which shall be settled in cash. The Consideration, which comprised of the First Investment Consideration and the Second Investment Consideration, was determined after arm’s length negotiations between parties to the Investment Agreement with reference to, among others, the registered capital and capital reserve of the Target Company, the prevailing market conditions and the financial conditions of the Target Company.

The First Investment

The First Investment Consideration in the sum of RMB20,000,000 shall be settled in cash within ten Business Days after the fulfilment of the conditions precedent of the First Completion. Upon the First Completion, the registered capital of the Target Company shall increase by RMB1,316,871 and the capital reserve shall increase by RMB18,683,129.

– 9 –

LETTER FROM THE BOARD

Set out below are the details of the proportion of the First Investment Consideration payable by the respective Subscribers, and the details of the Subscribers’ equity interest in the Target Company upon the First Completion:

Subscribers Subscriber A Subscriber B Subscriber C Subscriber D Total	First Investment Consideration RMB 15,000,000 1,500,000 1,750,000 1,750,000 20,000,000	Amount increased in the registered capital of the Target Company RMB 987,654 98,765 115,226 115,226 1,316,871	Amount increased in the capital reserve of the Target Company RMB 14,012,346 1,401,235 1,634,774 1,634,774 18,683,129	Equity interest in the Target Company upon First Completion (Note) % 6.82% 0.68% 0.80% 0.80%
				9.10%

Note: Assuming the Target Company’s relevant shareholders registration with the PRC government authority has been completed and no further change in the registered capital of the Target Company from the date of this circular up to the First Completion.

Conditions precedent to the First Completion

The First Completion is conditional upon fulfilment of the following:

(i) the declarations and warranties made by the Target Company, Hangzhou Jiahao, Tianjin Lance and Mr. Sun remaining true, accurate, complete and non-misleading in all material respects from the date of the Investment Agreement up to the date of the First Completion;
(ii) every party to the Investment Agreement having executed and delivered all the documents in relation to the Investment Agreement and the Proposed Transactions, including but not limited to, the Investment Agreement, any applicable capital injection agreement (if any), and new articles of association of the Target company;

– 10 –

LETTER FROM THE BOARD

(iii) (aa) the passing of the relevant resolutions by the shareholders of the Target Company at its general meeting to approve (1) the Investment Agreement and the Proposed Transactions; (2) the new articles of association of the Target Company; and (3) the change in the composition of the board of the Target Company; (bb) Hangzhou Lanpeng agreeing to waive all its relevant rights in the Investment Agreement including but not limited to the pre-emptive right; and (cc) the provision of information by the Target Company, Hangzhou Jiahao, Tianjin Lance and Mr. Sun during the course of due diligence satisfying the requirements of the Subscribers, where required;
(iv) no material adverse change in the operation of the Target Company or no major disciplinary actions faced by the Target Company from the date of the Investment Agreement to the date on which the First Investment Consideration being settled; and
(v) the passing of the relevant resolutions by the shareholders of the Target Company at its general meeting to approve the change in its registered address to the address designated by Subscriber A.

As at the Latest Practicable Date, conditions precedent (ii), (iii) and (v) have been fulfilled and conditions precedent (i) and (iv) have not been fulfilled.

The Second Investment

The Second Investment Consideration in the sum of RMB20,000,000 shall be settled in cash within ten Business Days after the fulfilment of the conditions precedent of the Second Investment. Upon the Second Completion, the registered capital of the Target Company shall increase by RMB1,316,871 and the capital reserve shall increase by RMB18,683,129.

Set out below are the details of the proportion of the Second Investment Consideration payable by the respective Subscribers, and the details of the Subscribers’ equity interest in the Target Company upon the Second Completion:

Subscribers Subscriber A Subscriber B Subscriber C Subscriber D Total	Second Investment Consideration RMB 15,000,000 1,500,000 1,750,000 1,750,000 20,000,000	Amount increased in the registered capital of the Target Company RMB 987,654 98,765 115,226 115,226 1,316,871	Amount increased in the capital reserve of the Target Company RMB 14,012,346 1,401,235 1,634,774 1,634,774 18,683,129	Equity interest in the Target Company upon Second Completion (Note) % 12.50% 1.25% 1.46% 1.46%
				16.67%

– 11 –

LETTER FROM THE BOARD

Conditions precedent to the Second Completion

The Second Completion is conditional upon fulfilment of the following:

(i) the passing of the requisite resolution(s) of the Independent Shareholders at the EGM to approve the Investment Agreement and the Proposed Transactions; and
(ii) the passing of the relevant resolutions by the shareholders of the Target Company at its general meeting to approve the new articles of association of the Target Company demonstrating, among others, the shareholding structure of the Target Company upon the Second Completion.

As at the Latest Practicable Date, none of the above conditions precedent has been fulfilled.

Redemption Right

After the occurrence of the Trigger Event (defined hereafter), each of the Subscribers has the right (the ‘‘Redemption Right’’) to require the Target Company, Hangzhou Jiahao, Tianjin Lance and Hangzhou Zhenniu to repurchase their entire equity interest in the Target Company, in full, at an aggregate cash consideration in RMB equal to the sum of (i) the First Investment; (ii) the Second Investment; and (iii) the interest on the First Investment and the Second Investment, on a simple interest basis, at a rate of 10% per annum from the respective dates of settlement of the First Investment and the Second Investment up to and including the date of the settlement of such repurchase (the ‘‘Repurchase Amount’’). For clarification purposes, although the Repurchase Amount is intended to be funded by the Target Company, Hangzhou Jiahao, Tianjin Lance and Hangzhou Zhenniu, the equity interest repurchased pursuant to the exercise of the Redemption Right shall be assigned to and held by Hangzhou Jiahao and Tianjin Lance according to their respective portion of equity interest in the Target Company at the relevant time.

Upon receipt of the notice of redemption right (the ‘‘Redemption Right Notice’’) from the Subscribers, the Target Company, Hangzhou Jiahao, Tianjin Lance and Hangzhou Zhenniu intend to negotiate relevant terms with the Subscribers and enter into the share transfer agreement(s) (the ‘‘Share Transfer Agreement(s)’’) within 60 days or a date to be agreed by the relevant parties upon receipt of the Redemption Right Notice. The Share Transfer Agreement(s), subject to the relevant applicable requirements of the Listing Rules, shall govern, among others, the settlement terms of the Repurchase Amount.

– 12 –

LETTER FROM THE BOARD

For the avoidance of doubt, in the event that the First Investment is completed but the Second Investment is not completed, after the occurrence of the Trigger Event (defined below), each of the Subscribers has the Redemption Right to require the Target Company, Hangzhou Jiahao, Tianjin Lance and Hangzhou Zhenniu to repurchase their equity interest in the Target Company at an aggregate consideration in RMB equal to the sum of (i) the First Investment; and (ii) the interest on the First Investment, on a simple interest basis, at a rate of 10% per annum from the date of settlement of the First Investment up to and including the date of the settlement of such repurchase.

The following events each constitutes a trigger event (the ‘‘Trigger Event’’):

(i) it is not possible, or attributable to a material change in the Target Company it becomes not feasible, to complete the listing of shares of the Target Company in any of the Shanghai Stock Exchange, the Shenzhen Stock Exchange or any other overseas stock exchange as agreed by the Subscribers on or before 31 December 2025 with a market capitalisation of not less than RMB5 billion (the ‘‘Qualified IPO’’) or the Target Company fail to prompt the Company to acquire the equity interest held by the Subscribers at the then terms agreed by the relevant parties, including the Existing Shareholders and the Subscribers (the ‘‘Negotiated Acquisition’’);
(ii) the change in the actual controller(s) of the Target Company or any other events which leads to the Target Company being unable to complete the Qualified IPO;
(iii) the violation of the terms of the Investment Agreement or laws of the PRC by the Target Company or Hangzhou Jiahao, Tianjin Lance and Mr. Sun which leads to the interest of the Subscribers being materially harmed;
(iv) the Target Company ceases operations and is unable to resume operations within one month after such cessation of operations; or
(v) the failure to obtain and/or maintain the necessary licenses or meet the corresponding requirements for the continuing operations of the Target Company.

As at the Latest Practicable Date, the Subscribers have not explicitly expressed the listing on which overseas stock exchange would be considered as the Qualified IPO. Nevertheless, after the completion of the Investment Agreement, the relevant parties shall explore and determine which overseas stock exchange(s) would be included for the purpose of the Qualified IPO at the appropriate time.

– 13 –

LETTER FROM THE BOARD

The Negotiated Acquisition can be initiated by the Company or the Subscribers, as and when a party sees fit at any time prior to 31 December 2025, the outcome and terms of which are subject to the then negotiation between the parties. As at the Latest Practicable Date, neither the Company nor the Subscribers has the intention to conduct a Negotiated Acquisition. Further terms of the Negotiated Acquisition shall be discussed and agreed by the Company and the Subscribers at the relevant time. Nonetheless, in the event that a Negotiated Acquisition materialises, the Company will comply with the applicable requirements under Chapters 14 and 14A of the Listing Rules, including reporting, announcement and independent Shareholders’ approval, as the case may be.

The Subscribers have advised the Company that the Subscribers intend to exercise their Redemption Rights if and when Trigger Event (i) has materialised on 31 December 2025 (the ‘‘Intended Repurchase’’), upon which, the Target Company, Hangzhou Jiahao, Tianjin Lance and Hangzhou Zhenniu shall repurchase their respective portion of equity interest in the Target Company from the subject Subscribers at the stipulated terms. For the avoidance of doubt, the Target Company has until 31 December 2025 to attain the event as specified under Trigger Event (i), failing which the Subscribers would then be able to exercise the Redemption Right under Trigger Event (i).

Trigger Events (iii) to (v) shall remain valid so long as the Subscriber(s) remain as shareholder(s) of the Target Company. However, as disclosed above, either (i) the Subscribers exercise their Redemption Rights if and when Trigger Event (i) materialised on 31 December 2025 and upon the completion of the Intended Repurchase, the Subscriber(s) shall cease to be the shareholder(s) of the Target Company. On this basis, Trigger Events (iii) to (v) shall no longer be valid upon the completion of the Intended Repurchase; or (ii) the Qualified IPO has been completed on or before 31 December 2025, in which case, the Redemptions Rights under the Investment Agreement will not become enforceable beyond the listing.

As at the Latest Practicable Date, the Subscribers did not explicitly express their intention to exercise, or otherwise, their Redemption Right in the event that any of the Trigger Events (ii) to (v) is materialised. Nevertheless, the Company shall comply with the applicable requirements in relation to any transactions arising from the exercise of the Redemption Rights by the Subscribers pursuant to the Listing Rules at the relevant time.

In the event that any transactions arising from the redemption right clause which would involve an increase in the Group’s equity interest in the Target Company that constitutes a notifiable transaction and/or a non-exempted connected transaction, as the case may be, the Company shall comply with the applicable requirements under Chapters 14 and 14A of the Listing Rules, including reporting, announcement and independent Shareholders’ approval, where applicable and as soon as practicable. In the event that the aforesaid transaction is subject to independent Shareholders’ approval pursuant to the Listing Rules but the Company fails to attain such approval, alternative solutions shall be negotiated and agreed between the relevant parties at the appropriate time.

– 14 –

LETTER FROM THE BOARD

Anti-dilution of the equity interest of the Subscribers

In the event that, after the completion of the Investments, the Target Company issues additional equity for a consideration per registered capital per RMB*（每元註冊資本價格）to any third parties (the ‘‘Further Investment Price’’) less than the Consideration per registered capital per RMB subscribed by the Subscribers (the ‘‘Investment Price’’), then Hangzhou Jiahao shall compensate such differences to the Subscribers either (i) in cash; or (ii) its equity interest in the Target Company at nil consideration such that the Investment Price is not higher than the Further Investment Price (the ‘‘Compensation’’). The amount of Compensation shall be determined by the following formula:

(Investment Price LESS Further Investment Price)

MULTIPLIED BY

registered capital held by the Subscribers

As at the Latest Practicable Date, Hangzhou Jiahao has not determined whether it intends to satisfy the Compensation by (i) cash; or (ii) its equity interest in the Target Company at nil consideration. Its decision on the form of settlement shall subject to, among others, the amount of the Compensation, the then financial performance and financial position of the Target Company and the Group as well as the industry overlook at the relevant time.

Upon the consent of the Subscribers, if Hangzhou Jiahao sells its equity interest in the Target Company at a consideration per registered capital per RMB (the ‘‘Hangzhou Jiahao Transfer Price’’) lower than the Investment Price, the Subscribers shall be entitled to compensation from Hangzhou Jiahao in the amount equal to a sum of the aforesaid difference, except in the event that (i) the disposal of equity interest in the Target Company is by way of share based payment as an incentive to employees of the Target Company; or (ii) the Subscribers waive such entitlement. Hangzhou Jiahao intends to settle such compensation (if any) in cash. In the event that Hangzhou Jiahao fails to settle such compensation in cash for any reason, Hangzhou Jiahao shall settle such compensation by transferring the then equity interest in the Target Company held by Hangzhou Jiahao to the Subscribers pursuant to the Investment Agreement. The Subscribers shall exercise their right under the anti-dilution clause by serving a notice to Hangzhou Jiahao (the ‘‘Anti-dilution Notice’’), the entire Compensation amount shall be settled in cash or equity interest transfer by Hangzhou Jiahao, within 60 business days or a date to be agreed by the relevant parties, upon the receipt of the Antidilution Notice, subject to the relevant applicable requirements of the Listing Rules. The amount of such compensation shall be determined by the following formula:

(Investment Price LESS Hangzhou Jiahao Transfer Price)

MULTIPLIED BY

registered capital held by the Subscribers

– 15 –

LETTER FROM THE BOARD

After the completion of the Investments, and that the implied market value[1] under the Further Investment Price is less than RMB1 billion, in the event that the Target Company proposes share based payment as an incentive to employees of the Target Company (the ‘‘Incentive Equity Interest’’), the equity interest of the Subscribers shall not be diluted, or equity interest of Hangzhou Jiahao, Tianjin Lance and Mr. Sun in the Target Company shall be transferred to the Subscribers at nil consideration to the Subscribers (the ‘‘Compensating Equity Interest’’) so that the equity interest of the Subscribers remained unchanged. The Compensating Equity Interest shall be determined by the following formula:

The equity interest of the Subscribers immediate before the issuance of the Incentive Equity Interest

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The equity interest of the Subscribers immediate after the issuance of the Incentive Equity Interest

The Compensation pursuant to the Investment Agreement, if materialised, is expected to be settled in full by Hangzhou Jiahao and Tianjin Lance in accordance with their respective equity interest in the Target Company. Given it is at the Subscribers’ request to include Mr. Sun as a party to the Investment Agreement to provide additional assurance and confident to the Subscribers, hence the Company does not consider Mr. Sun to have a significant role in the Investment Agreement in this regard. Mr. Sun did not hold any shares in the Target Company as at the Latest Practicable Date and assuming that Mr. Sun will not hold any shares in the Target Company up to the date that the Compensation is settled, Mr. Sun would not transfer any equity interest in the Target Company to the Subscribers to settle the Compensation. For the avoidance of doubt, save for Hangzhou Jiahao and Tianjin Lance fail to satisfy the Compensation, Mr. Sun would not contribute towards the settlement of the Compensation.

After the completion of the Investments, and that the implied market value[1] under the Further Investment Price is not less than RMB1 billion, if the Target Company proposes share based payment as an incentive to employees of the Target Company, which the accumulated new employees’ incentive equity interest representing less than 10% of the Target Company’s equity interest, the equity interest of the Subscribers shall only be diluted to the same extent of the other shareholders of the Target Company and shall not be diluted by more than 10%.

1 Implied market value represents the Further Investment Price multiplied by the then total registered capital of the Target Company.

– 16 –

LETTER FROM THE BOARD

After the completion of the Investments, and that the implied market value[1] under the Further Investment Price is not less than RMB1 billion, if the Target Company proposes share based payment as an incentive to employees of the Target Company and that the equity interest of the Subscribers is diluted by more than 10%, Hangzhou Jiahao, Tianjin Lance and Mr. Sun shall transfer their equity interest in the Target Company to the Subscribers at nil consideration (i.e. the Compensating Equity Interest) to the extent that the dilution effect of the Subscribers as a result of share-based payment to employees is no more than 10%. In this connection, the Compensating Equity Interest shall be determined by the following formula:

The equity interest of the Subscribers immediate before the issuance of the Incentive Equity Interest X 90%

LESS

The equity interest of the Subscribers immediate after the issuance of the Incentive Equity Interest

The basis for determining the amount and/or percentage of the equity interest in the Target Company to be compensated was arrived at after arm’s length negotiations with the Subscribers, which comprised of one connected person and three Independent Third Parties. In this connection, the Company has also considered, among others, the reasons for and benefits of entering into the Investment Agreements, the Consideration is intended to be used as working capital for the development, promotion and operation of Little Blue Book, the terms of the Investment Agreement in its entirety, the anti-dilution terms in relation to similar transactions announced by other main board listed issuers, in particular, deemed disposals as a result of a subscription of shares at the subsidiary level of the subject listed company, when determining the basis of the anti-dilution terms set out herein.

In the event that any transactions arising from the anti-dilution clause which would involve a dilution in the Group’s equity interest in the Target Company that constitutes a notifiable transaction and/or a non-exempted connected transaction, as the case may be, such as a share repurchase or a deemed disposal in the Target Company by the Group, the Company shall comply with the applicable requirements under Chapters 14 and 14A of the Listing Rules, including reporting, announcement and independent Shareholders’ approval, where applicable and as soon as practicable. In the event that the aforesaid transaction is subject to independent Shareholders’ approval pursuant to the Listing Rules but the Company fails to attain such approval, alternative solutions shall be negotiated and agreed between the relevant parties at the appropriate time.

1 Implied market value represents the Further Investment Price multiplied by the then total registered capital of the Target Company.

– 17 –

LETTER FROM THE BOARD

The Subscribers have advised the Company that the Subscribers intend to exercise their Redemption Rights if and when Trigger Event (i) have materialised on 31 December 2025 (i.e. the Intended Repurchase). On this basis, Hangzhou Jiahao, Tianjin Lance and Hangzhou Zhenniu would have repurchased the Investments, if consummated, under the terms of the Redemption Right on 31 December 2025. Given the anti-dilution right is only valid if the Subscriber(s) remain to be shareholder of the Target Company, the Subscribers will no longer have the anti-dilution right after the Intended Repurchase.

Other terms

As long as the Subscribers hold equity interest in the Target Company:

(i) the equity interest in the Target Company held, directly or indirectly, by Hangzhou Jiahao and Hangzhou Zhenniu shall not be sold, pledged, or transferred, except upon the consent of the Subscribers, and if Hangzhou Jiahao, directly or indirectly, transfers its equity interest in the Target Company to any third party, the Subscribers entitle the priority over Hangzhou Jiahao to sell its equity interest in the Target Company to such third party with the same terms and conditions; and
(ii) before the completion of the Qualified IPO of the Target Company, the Subscribers have the priority to acquire, in proportion to their equity interest in the Target Company, any new equity issued by the Target Company.

Liquidation entitlement

In the event that the Target Company has been taken over, sold, merged or split, or the Target Company has sold or donated all or most its important assets, businesses, or any other similar events, such events are considered to be deemed liquidation (each event a ‘‘Deemed Liquidation’’).

Upon any liquidation, dissolution, winding up or Deemed Liquidation of the Target Company, for the proceeds from liquidation after payment of relevant taxes and liabilities in accordance with applicable laws (the ‘‘Liquidation Proceeds’’), before any distribution or payment being made to Hangzhou Jiahao, Tianjin Lance, Mr. Sun and Hangzhou Lanpeng, the Subscribers are entitled to an amount equal to the sum of the respective Consideration paid to the Target Company with an interest at a rate of 8% per annum (the ‘‘Liquidation Entitlement’’). The remaining Liquidation Proceeds shall be distributed in proportion to the respective equity interest in the Target Company of all the shareholders of the Target Company at the relevant time.

In the event that the Liquidation Proceeds must be distributed in proportion to the respective equity interest in the Target Company of all the shareholders of the Target Company upon the request of liquidators or the order of courts, the Hangzhou Jiahao, Tianjin Lance, Mr. Sun and Hangzhou Lanpeng shall repay to the Subscribers an amount equals to the Liquidation Entitlement.

– 18 –

LETTER FROM THE BOARD

Management and operation of the Target Company

So far as the Subscribers remain to be shareholders of the Target Company, the board of directors of the Target Company shall comprise of three members, of which (i) two directors are to be joint nominated by Hangzhou Jiahao, Tianjin Lance and Mr. Sun; and (ii) one director is to be nominated by Subscriber A.

INFORMATION OF THE PARTIES

The Subscribers

Set out below are the details of the Subscribers.

		Background information in relation
Subscribers	Principal activities	to the ultimate beneficial owner(s)
Subscriber A	Venture investment	Mr. Wang Yonghua, a substantial
	management and venture	Shareholder and the controlling
	investment advisory	shareholder of Tian Tu Capital Co.,
		Ltd.* 深圳市天圖投資管理股份有限
		公司as at the Latest Practicable Date
Subscriber B	Industrial investment,	Hangzhou Yingdong Investment
	investment management,	Management Co., Ltd.* 杭州盈動投
	and investment advisory	資管理有限公司, whose principal
		activities include investment
		management and business
		management consulting, being an
		Independent Third Party indirectly
		majority-owned by Mr. Xiang
		Jianbiao
Subscriber C	Investment advisory	Mr. Guo Ruyi and Mr. Hu Wenqin,
		both are Independent Third Parties
Subscriber D	Industrial investment and	Hangzhou Laidian Investment
	investment management	Management Co., Ltd.* 杭州來電投
		資管理有限公司, whose principal
		activities include investment
		management, being an Independent
		Third Party indirectly majority-owned
		by Mr. Yao Bibo

– 19 –

LETTER FROM THE BOARD

Subscriber A is a connected person of the Company as the ultimate beneficial owner of the Subscriber A, Mr. Wang Yonghua (a substantial Shareholder) is interested in approximately 12.90% of issued share capital of the Company as at the Latest Practicable Date. Ms. Zou Yunli, being the non-executive Director, is also one of the directors of Subscriber A’s immediate shareholder (Tian Tu Capital Co., Ltd.* 深圳市天圖投資管理股份有限公司, the shares of which are listed on the National Equities Exchange and Quotations (stock code: 833979)).

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, each of the Subscriber B, the Subscriber C and the Subscriber D and their respective ultimate beneficial owners is an Independent Third Party.

Information of the Group

The principal activity of the Company is investment holding whilst its major operating subsidiaries operate an online credit card management platform.

Information of the Target Company

As at the Latest Practicable Date, the Target Company is an indirect non-wholly owned subsidiary of the Company owned as to approximately 69.62%, 24.68% and 5.70% by Hangzhou Jiahao, Tianjin Lance and Hangzhou Lanpeng, respectively. The Target Company is incorporated in the PRC with limited liability with registered capital of approximately RMB13.2 million as at the Latest Practicable Date and the total amount of approximately RMB47.8 million was invested into the Target Company, since its date of incorporation up to and including the Latest Practicable Date by the Group. Upon the First Completion, the registered capital of the Target Company will increase to approximately RMB14.5 million, which will be owned as to approximately 63.30%, 22.43%, 5.17% and 9.10% by Hangzhou Jiahao, Tianjin Lance, Hangzhou Lanpeng and the Subscribers, respectively. Upon the First Completion and the Second Completion, the registered capital of the Target Company will increase to approximately RMB15.8 million, which will be owned as to approximately 58.02%, 20.57%, 4.74% and 16.67% by Hangzhou Jiahao, Tianjin Lance, Hangzhou Lanpeng and the Subscribers, respectively.

As at the Latest Practicable Date, the Target Company is principally engaged in the provision of commercial information searching business.

– 20 –

LETTER FROM THE BOARD

Set out below is a summary of the unaudited financial information of the Target Company since the date of its incorporation up to 31 December 2019:

	For the period since
	the date of incorporation of
	the Target Company
	up to 31 December 2019
	RMB’000
Revenue	–
Net loss before taxation	(38,159)
Net loss after taxation	(38,159)

In March 2020, (i) the amount due to Hangzhou Jiahao of approximately RMB38.5 million was converted into the registered capital and the capital reserve of the Target Company; and (ii) Hangzhou Jiahao and Tianjin Lance further invested, in the sum of approximately RMB6.0 million and approximately RMB2.8 million, respectively, in the form of additional registered capital of the Target Company. The unaudited total asset and net liability of the Target Company as at 31 March 2020 amounted to approximately RMB14.6 million and approximately RMB1.0 million, respectively.

Information of Hangzhou Jiahao

Hangzhou Jiahao was incorporated under the laws of the PRC and principally engages in the provision of technology services. As at the Latest Practicable Date, its equity interest is jointly owned by Mr. Zhu and Mr. Guan Jun. Pursuant to the Shareholders’ Arrangement entered into between Hangzhou Jiahao, Hangzhou Zhenniu, Mr. Zhu and Mr. Guan Jun, which sets out the commercial agreements in relation to, among others, the management of and the distribution of profits of Hangzhou Jiahao, Hangzhou Jiahao is wholly controlled by the Company as to voting rights and economic interest.

Information of Tianjin Lance

Tianjin Lance was incorporated under the laws of the PRC and principally engages in the provision of consulting services. Tianjin Lance is established for the purpose of administering and holding the Shares for a proposed employee incentive scheme.

Information of Hangzhou Lanpeng

Hangzhou Lanpeng was incorporated under the laws of the PRC and principally engages in the provision of management consulting services, Internet technology consulting services, marketing, business information consulting services and economic information consulting services.

– 21 –

LETTER FROM THE BOARD

Information of Hangzhou Zhenniu

Hangzhou Zhenniu was incorporated under the laws of the PRC and principally engages in the provision of technology services. Hangzhou Zhenniu is the wholly-owned subsidiary of the Company.

REASONS FOR AND BENEFITS OF ENTERING INTO THE INVESTMENT AGREEMENT AND USE OF PROCEEDS

To maintain the competitiveness of the Group in the rapidly changing financial technology industry, the Group actively carry out innovative research and development of new business. In May 2019, our innovative business ‘‘Little Blue Book’’ was officially launched. Little Blue Book is a business information search tool published by the Company, which aims to provide users with valuable business information. Based on internal data of the Company, more than 70% of the authenticated users are general managers, legal representatives, directors, employers and other senior management personnel and operating decision makers. Since the online promotion of Little Blue Book in September 2019, the number of users has exceeded 5.6 million. As of December 2019, active users amounted to approximately 2.6 million per month.

The Directors are of the view that the business of Little Blue Book is still in its infancy stage with no revenue recognised and requires continuous investment for further development. The Investments could introduce long-term investors to Little Blue Book and enhance its registered capital with an aim to further expand its user base and market shares and to help advance Little Blue Book’s development plan.

After completion of the Investment Agreement, the Target Company will continue to operate and develop its commercial information search business. The Consideration received is intended to be used as working capital for the development, promotion and operation of Little Blue Book.

In view of this, the Directors are of the view that the terms of the Investment Agreement and the Proposed Transactions are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE INVESTMENTS TO THE GROUP

The Company’s interest in the Target Company will be reduced from approximately 94.30% to approximately 85.73% upon the First Completion, and further to approximately 78.59% upon the Second Completion, resulting in a deemed disposal of approximately 15.71% equity interest in the Target Company by the Company. The Target Company will continue to remain as a non-wholly owned subsidiary of the Company, and its results, assets and liabilities will continue to be consolidated into the consolidated financial statements of the Group. Given the Deemed Disposal does not result in a change of control, it will not recognise any gain or loss in the Group’s consolidated income statement.

– 22 –

LETTER FROM THE BOARD

Shareholders should note that the above figures are for illustrative purpose only. The actual financial effects on the Deemed Disposal may be different from the above situation and will be determined based on the financial position of the Target Company on the First Completion and the Second Completion and the review by the Group’s auditor upon finalisation of the consolidated financial statements of the Group.

LISTING RULES IMPLICATIONS

(i) The Investment Agreement and the Deemed Disposal

The equity interest of the Group in the Target Company will be diluted from approximately 94.30% to approximately 85.73% upon the First Completion and further to approximately 78.59% upon the Second Completion, and therefore the Investments constitute a deemed disposal of the Group’s equity interest in the Target Company under Rule 14.29 of the Listing Rules. As one or more of the applicable percentage ratios for the Consideration under the Listing Rules exceed 5% but all under 25%, the Deemed Disposal constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As Subscriber A is a connected person of the Company, the Investment Agreement and the Proposed Transactions also constitute a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and Independent Shareholders’ approval requirements.

(ii) The Redemption Right and the anti-dilution right

As the exercise of the Redemption Right is not at the discretion of the Target Company, the Redemption Right is being considered as an option granted to the Subscribers under Rule 14.74(1) of the Listing Rules and classified as if it had been fully exercised at the time of the grant. Accordingly, the grant of the Redemption Right would be treated as a transaction and classified by reference to the percentage ratios pursuant to Rule 14.04(1)(b) and Rule 14.73 of the Listing Rules.

Furthermore, as one or more of the applicable percentage ratios under the Listing Rules in respect of the Redemption Right exceed 5% but all below 25%, the Redemption Right constitutes a discloseable transaction of the Company.

As Subscriber A is a connected person of the Company, the Redemption Right and the and the anti-dilution right, together with the Investment Agreement and the Proposed Transactions also constitute a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and Independent Shareholders’ approval requirements.

EGM

The EGM will be held at United Conference Centre, 10/F., United Centre, 95 Queensway, Admiralty, Hong Kong on Friday, 29 May 2020 at 11:15 a.m. The notice convening the EGM, the proxy form and the reply slip have been sent to the Shareholders on 11 May 2020.

– 23 –

LETTER FROM THE BOARD

Any Shareholder who is entitled to attend and vote at the EGM has the right to appoint one or more proxies to do so on behalf of himself/herself. The proxy need not be a Shareholder. In order to ensure validity, a completed revised proxy forms and other authorization documents (if any) must be delivered to the Company’s Hong Kong share registrar, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong. A Shareholder who has completed and delivered the revised proxy form can still attend the EGM and vote in person. All resolutions to be proposed at the EGM will be voted on by way of poll in accordance with the Listing Rules.

Each of Mr. Sun and Ms. Zou Yunli had abstained from voting on the relevant board resolutions approving the Investment Agreement and the Proposed Transactions.

Mr. Sun, Ms. Zou Yunli, Mr. Zhu and any other Shareholder with a material interest in the Investment Agreement and the Proposed Transactions and their associates will abstain from voting at the EGM.

Save for the above, to the best of the Director’s knowledge, information and belief, having made all reasonable enquiries, no Shareholder has any material interest in the resolution(s) in relation to the Investment Agreement and the Proposed Transactions to be proposed at the EGM and will abstain from voting at the EGM.

RECOMMENDATIONS

The Directors (including the independent non-executive Directors who have taken advice from the Independent Financial Adviser, their views and opinion of which are further set out in the letter from the Independent Board Committee in this circular) consider that the terms of the Investment Agreement and the Proposed Transactions are on normal commercial terms, in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, the Directors (including the independent non-executive Directors) recommend the Shareholders to vote in favour of the resolution for approving the Investment Agreement and the Proposed Transactions at the EGM.

An Independent Board Committee comprising all the independent non-executive Directors has been established to advise the Independent Shareholders in relation to the Investment Agreement and the Proposed Transactions. Your attention is drawn to the advice of the Independent Board Committee set out in its letter on page 26 of this circular.

Your attention is also drawn to the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the same set out on pages 27 to 42 in this circular.

The Independent Board Committee, having taking into account the advice of the Independent Financial Adviser, considers that the entering into of the Investment Agreement and the Proposed Transactions are on normal commercial terms, in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned.

– 24 –

LETTER FROM THE BOARD

FURTHER INFORMATION

Your attention is also drawn to the additional information set out in the Appendix I to this circular.

Yours faithfully By order of the Board 51 Credit Card Inc. Sun Haitao

Chairman, Chief Executive Officer and Executive Director

– 25 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [80 x 36] intentionally omitted <==

51 CREDIT CARD INC. 51 信用卡有限公司 (Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2051)

==> picture [64 x 11] intentionally omitted <==

To the Independent Shareholders

Dear Sirs or Madams,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE DEEMED DISPOSAL OF INTEREST IN THE TARGET COMPANY

We refer to the circular of the Company dated 11 May 2020 (the ‘‘Circular’’) to the Shareholders, of which this letter forms part. Terms defined in the Circular have the same meanings in this letter unless the context otherwise requires.

In compliance with the Listing Rules, we have been appointed to advise the Independent Shareholders as to whether the terms of the Investment Agreement and the Proposed Transactions entered into by the Company are in the ordinary and usual course of business, on normal commercial terms, in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. Rainbow Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. Details of, and the reasons for, the Investment Agreement and the Proposed Transactions are contained in the letter from the Board set out on pages 6 to 25 of the Circular.

Having considered the terms of the Investment Agreement and the advice of Rainbow Capital to us and the Independent Shareholders, we are of the opinion that the terms of the Investment Agreement and the Proposed Transactions entered into by the Company are in the ordinary and usual course of business, on normal commercial terms, in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Investment Agreement and the Proposed Transactions.

Yours faithfully, the Independent Board Committee of

51 Credit Card Inc.

Mr. Wong Ti Mr. Ye Xiang Mr. Xu Xuchu Independent Non-executive Independent Non-executive Independent Non-executive Director Director Director

– 26 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter of advice from Rainbow Capital, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

==> picture [121 x 55] intentionally omitted <==

11 May 2020

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE DEEMED DISPOSAL OF INTEREST IN THE TARGET COMPANY

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in connection with the first and second investments of equity interests by the Subscribers in the Target Company pursuant to the Investment Agreement dated 14 April 2020. Details of the Investment Agreement and the Proposed Transactions are set out in the ‘‘Letter from the Board’’ (the ‘‘Letter from the Board’’) contained in the circular issued by the Company to the Shareholders dated 11 May 2020 (the ‘‘Circular’’), of which this letter forms part. Unless the context otherwise requires, capitalised terms used in this letter shall have the same meanings as those defined in the Circular.

Amongst the Subscribers, Subscriber A is ultimately beneficially owned by Mr. Wang Yonghua, who is a substantial Shareholder interested in approximately 12.90% of the issued share capital of the Company as at the Latest Practicable Date. Besides, Ms. Zou Yunli, being a non-executive Director, is also one of the directors of Subscriber A’s immediate shareholder. Accordingly, Subscriber A is a connected person of the Company under the Listing Rules and the investments by Subscriber A (the ‘‘Subscriber A Investments’’) constitute a connected transaction of the Company, which is subject to the approval of the Independent Shareholders by way of poll at the EGM. Since the Investments, which include the Subscriber A Investments, will result in a dilution in the equity interest of the Company in the Target Company from approximately 94.30% to approximately 78.59%, the Investments also constitute a deemed disposal and a discloseable transaction of the Company under the Listing Rules. Mr. Sun, Ms. Zou Yunli, Mr. Zhu and any other Shareholder with a material interest in the Investment Agreement and the Proposed Transactions and their respective associates will abstain from voting at the EGM.

– 27 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee, comprising all independent non-executive Directors, namely Mr. Wong Ti, Mr. Ye Xiang and Mr. Xu Xuchu, has been formed to advise the Independent Shareholders in respect of the Investment Agreement and the Proposed Transactions. We, Rainbow Capital, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

As at the Latest Practicable Date, we did not have any relationships or interests with the Group or the Subscribers, or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules that could reasonably be regarded as relevant to our independence. In the last two years, there was no engagement between the Group and us. Apart from normal professional fees paid or payable to us in connection with this appointment as the Independent Financial Adviser, no arrangements exist whereby we had received any fees or benefits from the Group or the Subscribers, or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules. Accordingly, we are qualified to give independent advice on the Investment Agreement and the Proposed Transactions.

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied on (i) the information and facts contained or referred to in the Circular; (ii) the information supplied by the Group and its advisers; (iii) the opinions expressed by and the representations of the Directors and the management of the Group; and (iv) our review of the relevant public information. We have assumed that all the information provided and representations and opinions expressed to us or contained or referred to in the Circular were true, accurate and complete in all respects as at the date thereof and may be relied upon. We have also assumed that all statements contained and representations made or referred to in the Circular are true at the time they were made and continue to be true as at the Latest Practicable Date and all such statements of belief, opinions and intentions of the Directors and the management of the Group and those as set out or referred to in the Circular were reasonably made after due and careful enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the management of the Group. We have also sought and received confirmation from the Directors that no material facts have been withheld or omitted from the information provided and referred to in the Circular and that all information or representations provided to us by the Directors and the management of the Group are true, accurate, complete and not misleading in all respects at the time they were made and continued to be so until the date of the Circular.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information provided, representations made or opinion expressed by the Directors and the management of the Group, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of the Group, or any of its respective substantial shareholders, subsidiaries or associates.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In considering whether the Investment Agreement and the Proposed Transactions are fair and reasonable in so far as the Independent Shareholders are concerned, we have taken into account the principal factors and reasons set out below:

1. Background to and reasons for entering into the Investment Agreement

(i) The Group

Listed on the Stock Exchange in July 2018, the Group is principally engaged in the operation of an online credit card management platform in the PRC, namely 51 Credit Card Manager App. Launched in 2012, the Group operates the first online credit card management platform in the PRC offering services such as managing multiple credit cards across different issuing banks, new credit card application and credit card bill repayment facilitation. As at the Latest Practicable Date, the Company had a market capitalisation of approximately HK$643.5 million.

As disclosed in the Company’s 2019 annual report (the ‘‘2019 Annual Report’’), the number of registered users of 51 Credit Card Manager App grew 12.8% to approximately 85.6 million as of 31 December 2019 from approximately 75.9 million as of 31 December 2018, and the number of credit cards the Group had managed cumulatively also grew 16.8% to approximately 143.7 million as of 31 December 2019 from approximately 123.0 million as of 31 December 2018.

For the year ended 31 December 2019, the Group recorded loss attributable to owners of the Group of approximately RMB1,128.9 million, as compared to profit attributable to owners of the Group of approximately RMB2,162.1 million in the previous year, primarily attributable to (a) the fair value gain of preferred shares of approximately RMB1,942.2 million in 2018, which was not replicated in 2019; (b) the decrease in credit facilitation and service fee by approximately RMB882.4 million due to the smaller scale of credit product facilitation and shorter average tenure in 2019 as compared to the previous year; and (c) the increase in the quality assurance fund loss by approximately RMB512.6 million as a result of the fluctuations in the industry in 2019.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As mentioned in the 2019 Annual Report, the Group’s business results and liquidity position have been and likely will continue to be adversely affected by (a) the stricter regulatory notices and guidance on peer to peer (‘‘P2P’’) and debtcollection industries, leading to the Group adopting a more prudent strategy towards its credit facilitation business and focusing on customers with higher credit quality as well as ceasing the facilitation of new P2P financing; and (b) the on-site investigation carried out by the relevant PRC authorities in October 2019 due to the suspected violation of laws and regulations by a debt collection agency the Group previously cooperated with, which has had a negative impact on the Group’s business and liquidity, including the decrease in the Group’s credit facilitation volume and the publicity leading to a higher risk of default for those loans facilitated by the Group. As a result, the loan balance facilitated by the Group for its P2P online lending business decreased from approximately RMB13.24 billion as of 31 December 2018 to approximately RMB5.63 billion as of 31 December 2019 and further decreased to approximately RMB3.5 billion as of 29 February 2020.

In addition, as disclosed in the 2019 Annual Report, the outbreak of the novel coronavirus in early 2020 has certain impact on the Group’s business operation and the overall economy and may affect the personal consumption credit market and increase the credit risk of the credit facilitation business to a certain extent.

Given the uncertainties associated with the regulatory environment and the impact of the novel coronavirus as mentioned above, the Group has become more cautious in managing its liquidity risk by maintaining adequate cash reserves and banking facilities. As such, the Group intends to retain its current financial resources for a better risk management. On this basis, we consider it preferable for the Group to consider funding the operation and development of the Target Company through the Investments without affecting the cash and debt position of the Group, particularly given the fact that most technology companies tend to incur losses during their initial stage of development before generating any sustainable profit as they focus on building up their market shares.

(ii) Background of entering into the Investment Agreement

The Target Company is principally engaged in the provision of commercial information searching business through its self-published business information search tool, namely Little Blue Book. As disclosed in the Letter from the Board, the business of Little Blue Book is still in its infancy stage. As of December 2019, active users of Little Blue Book amounted to approximately 2.6 million per month.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Given that the penetration of Little Blue Book in the market is still at a low level, it is currently expected that substantial promotional and advertising expenses are required to expand the active users and the market share of Little Blue Book. To that end, we are advised by the management of the Group that the investments from strategic investors would facilitate the financing and operation needs of the Target Company. Accordingly, on 14 April 2020, the Investment Agreement, which included the First Investment and the Second Investment, was entered into between the Target Company, the Existing Target Company Shareholders (Hangzhou Jiahao, Tianjin Lance and Hangzhou Lanpeng), Mr. Sun (the chairman, the chief executive officer of the Company and the executive Director), Hangzhou Zhenniu (a whollyowned subsidiary of the Company) and the four strategic investors, namely Subscriber A, Subscriber B, Subscriber C and Subscriber D, to obtain investments of approximately RMB40.0 million in aggregate from the Subscribers to the Target Company.

(iii) Reasons for and benefits of entering into the Investment Agreement

As disclosed in the Letter from the Board, the Directors are of the view that the business of Little Blue Book is still in its infancy stage with no revenue recognised and would require continuous investment for further development. The Investments are expected to introduce strategic investors to the Target Company and provide immediate fund to the Target Company with an aim to further expand its user base and market share.

Based on the latest information available to us, the Subscribers are principally engaged in the venture investment management, industrial investment and related advisory businesses. In particular, for Subscriber A, it consists of a diversified shareholder bases involving venture capital fund and funds guided by the PRC government and has extensive experience in investing in technology companies in the PRC. In this context, we concur with the Directors’ view that through the introduction of the Subscribers, the Investments are expected to be strategically beneficial to the Target Company, in particular providing funding needs for the operation and development of Little Blue Book.

As advised by the management of the Group, the Company has all along been actively seeking for new investors to provide funding to its existing business, including but not limited to the investments into the Target Company through the entering into the Investment Agreement. Accordingly, we consider the entering into the Investment Agreement is in the ordinary and usual course of business of the Company. Following the completion of the Investments, the registered capital of the Target Company will be increased from approximately RMB13.2 million to approximately RMB15.8 million, and the Company’s effective equity interests in the Target Company will be diluted from approximately 94.30% to approximately 78.59%. Accordingly, the Target Company will continue to remain as a non-wholly owned subsidiary of the Company and its results, assets and liabilities will continue to be consolidated into the consolidated financial statements of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into account (i) the continuous investment to be required to fund the operation and development of the Target Company in view of the infancy stage of Little Blue Book, (ii) the tightening operating environment as evidenced by the decrease in loan balances facilitated by the Group for its P2P online lending business for the year ended 31 December 2019 as compared to the previous year, (iii) the Group’s intention to strengthen the liquidity position with a view to retaining its current financial resources for its operation given the uncertainties associated with the regulatory environment and the impact of the novel coronavirus as mentioned in the sub-section 1(i) headed ‘‘The Group’’; and (iv) the fact that the Target Company still remains as a subsidiary of the Group following the Investments, we consider that the Investments at this stage would ease the financial burdens of the Company, and is a prudent and reasonable approach to the development of the Target Company.

2. Principal terms of the Investment Agreement

For details of the terms of the Investment Agreement, please refer to the section headed ‘‘The Investment Agreement’’ in the Letter from the Board. Set out below are the principal terms of the Investment:

(i) Subject matter

On 14 April 2020 (after trading hours), the Subscribers, the Target Company, the Existing Target Company Shareholders, Mr. Sun and Hangzhou Zhenniu entered into the Investment Agreement, pursuant to which the Subscribers have conditionally agreed to invest and the Target Company conditionally agreed to issue additional registered capital of approximately RMB2.6 million at a total consideration of RMB40.0 million in cash, of which approximately RMB2.6 million as additional registered capital of the Target Company and approximately RMB37.4 million as additional capital reserve of the Target Company, by way of the First Investment and the Second Investment. The additional registered capital represents approximately 16.67% equity interest in the enlarged registered capital of the Target Company after the First Completion and the Second Completion.

Upon completion of the Investments, the aggregate equity interests of the Target Company held by the Company through its wholly-owned subsidiaries, Hangzhou Jiahao and Tianjin Lance, will be diluted from approximately 94.30% to approximately 78.59%. On the other hand, the registered capital of the Target Company would be increased from approximately RMB13.2 million to approximately RMB15.8 million.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below are the simplified shareholding structures of the Target Company held by the Existing Target Company Shareholders as at the Latest Practicable Date and immediately after completion of the Investments:

As at the Latest Practicable Date:

Hangzhou Jiahao	Hangzhou Jiahao		Tianjin Lance	Tianjin Lance		Hangzhou Lanpeng
	69.62%			24.68%

(Registered capital: RMB13,168,724)

Immediately after completion of the Investments:

==> picture [445 x 112] intentionally omitted <==

----- Start of picture text -----

Hangzhou Tianjin Hangzhou Subscriber Subscriber Subscriber Subscriber
Jiahao Lance Lanpeng A B C D
58.02% 20.57% 4.74% 12.50% 1.25% 1.46% 1.46%
Target Company
----- End of picture text -----

(Registered capital: RMB15,802,466)

(ii) Consideration

Pursuant to the Investment Agreement, the Consideration shall be RMB40.0 million, which shall be settled in cash. As disclosed in the Letter from the Board, the Consideration, which comprised of the First Investment Consideration and the Second Investment Consideration, was determined after arm’s length negotiations between parties to the Investment Agreement with reference to, among others, the registered capital and capital reserve of the Target Company, the prevailing market conditions and the financial conditions of the Target Company.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The First Investment and the Second Investment

Each of the First Investment and Second Investment in the sum of RMB20.0 million each shall be settled in cash within ten Business Days after the fulfilment of the conditions precedent of the First Completion and the Second Completion, respectively. Upon the First Completion and Second Completion, the registered capital of the Target Company shall increase by approximately RMB2.6 million in aggregate, from approximately RMB13.2 million to approximately RMB15.8 million and the capital reserve shall increase by approximately RMB37.4 million from approximately RMB35.3 million to approximately RMB72.7 million respectively.

Set out below are the details of the proportion of the First Investment Consideration and the Second Investment Consideration payable by the respective Subscribers, and the details of the Subscribers’ equity interest in the Target Company upon First Completion and the Second Completion:

Subscribers Subscriber A Subscriber B Subscriber C Subscriber D Total	First Investment Consideration and Second Investment Consideration RMB 30,000,000 3,000,000 3,500,000 3,500,000 40,000,000	Total increase in the registered capital of the Target Company RMB 1,975,308 197,530 230,452 230,452 2,633,742	Total increase in the capital reserve of the Target Company RMB 28,024,692 2,802,470 3,269,548 3,269,548 37,366,258	Equity interest in the Target Company upon First Completion and Second Completion % 12.50% 1.25% 1.46% 1.46%
				16.67%

The conditions precedents of the First Completion and Second Completion has been stated in the Letter from the Board. As at the Latest Practicable Date, conditions precedent (ii), (iii) and (v) of the First Completion and none of the conditions precedent of the Second Completion have been fulfilled.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) Redemption Right

After the occurrence of trigger events, consisting primarily of the Target Company being unable to achieve a qualified listing on a stock exchange as agreed by the Subscribers on or before 31 December 2025 with a market capitalisation of not less than RMB5 billion, as stated in the Letter from the Board, each of the Subscribers has the Redemption Right to require the Target Company, Hangzhou Jiahao, Tianjin Lance and Hangzhou Zhenniu to repurchase their entire equity interest in the Target Company, in full, at an aggregate cash consideration in RMB equal to the sum of (i) the First Investment; (ii) the Second Investment; and (iii) the interest on the First Investment and the Second Investment, on a simple interest basis, at a rate of 10% per annum from the respective dates of settlement of the First Investment and the Second Investment up to and including the date of the settlement of such repurchase. In this connection, the equity interest to be repurchased pursuant to the exercise of the Redemption Right shall be assigned to and held by Hangzhou Jiahao and Tianjin Lance according to their respective portion of equity interest in the Target Company.

As stated in the Letter from the Board, each of the Subscribers has the Redemption Right in the event that the First Investment is completed but the Second Investment is not completed. Furthermore, in the event that any transactions arising from the exercise of the Redemption Right would cause an increase in the Group’s equity interest in the Target Company that constitute notifiable transactions and/or non-exempted connected transactions and are subject to independent Shareholders’ approval pursuant to the Listing Rules, but the Company fails to attain such approval, alternative solutions shall be negotiated and agreed between the relevant parties at the appropriate time.

(iv) Anti-dilution of the equity interest of the Subscribers

After the completion of the Investments, in the event that:

(a) the Target Company issues additional equity for a consideration per each registered capital per RMB to any third parties (the ‘‘Further Investment Price’’) less than the Consideration per registered capital per RMB subscribed by the Subscribers (the ‘‘Investment Price’’), then Hangzhou Jiahao shall compensate such differences to the Subscribers either (i) in cash; or (ii) its equity interest in the Target Company at nil consideration such that the Investment Price is not higher than the Further Investment Price;
(b) Hangzhou Jiahao sells its equity interest in the Target Company lower than the Investment Price, the Subscribers shall be entitled to compensation from Hangzhou Jiahao in the amount equal to a sum of the difference;
(c) the Further Investment Price is less than RMB1 billion and the Target Company proposes share based payment as an incentive to its employees, the equity interest of the Subscribers shall not be diluted, or equity interest of Hangzhou Jiahao, Tianjin Lance and Mr. Sun in the Target Company shall be transferred to the Subscribers at nil consideration, so that the equity interest of the Subscribers remained unchanged; and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(d) the Further Investment Price is not less than RMB1 billion, the Target Company proposes share based payment as an incentive to its employees which cause the employees’ incentive portion to be less than 10% of the Target Company’s equity interest, the equity interest of the Subscribers shall only be diluted to the same extent of the other shareholders of the Target Company and shall not be diluted by more than 10%. In case the equity interest of the Subscribers is diluted by more than 10%, Hangzhou Jiahao, Tianjin Lance and Mr. Sun shall transfer their equity interest in the Target Company to the Subscribers at nil consideration to the extent that the dilution effect of the Subscribers as a result of share-based payment to employees is no more than 10%.

Please refer to the Letter from the Board in respect of the calculation formulas in determining the amount of compensation to the Subscribers as mentioned in (a)(d) above.

Furthermore, in the event that any transactions arising from the anti-dilution clause would result in dilution in the Group’s equity interest in the Target Company that constitute notifiable transactions and are subject to independent Shareholders’ approval pursuant to the Listing Rules, but the Company fails to attain such approval, alternative solutions shall be negotiated and agreed between the relevant parties at the appropriate time.

(v) Liquidation entitlement

Upon any liquidation events of the Target Company, for the proceeds from liquidation after payment of relevant taxes and liabilities in accordance with applicable laws, before any distribution or payment being made to Hangzhou Jiahao, Tianjin Lance, Mr. Sun and Hangzhou Lanpeng, the Subscribers are entitled to an amount equal to the sum of the respective Consideration paid to the Target Company with an interest at a rate of 8% per annum. The remaining liquidation proceeds shall be distributed in proportion to the respective equity interest in the Target Company of all the shareholders of the Target Company at the relevant time.

(vi) Composition of the board of directors of the Target Company

Following completion of the Subscription, the board of directors of the Target Company shall comprise of three directors, out of which two directors are to be jointly nominated by Hangzhou Jiahao, Tianjin Lance and Mr. Sun and one director is to be nominated by Subscriber A. In other words, the Company is entitled to nominate two out of three directors of the Target Company through Hangzhou Jiahao, Tianjin Lance and Mr. Sun.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Overall comment

The terms of the Subscriber A Investments are the same as the terms of investments by Subscriber B, Subscriber C and Subscriber D which are Independent Third Parties.

The Investment Agreement contains other clauses such as Redemption Right and the anti-dilution right. We consider these clauses are common market practice, on the basis that the Investments are in substance pre-IPO investments, which typically contain these clauses as special rights to pre-IPO investors and cannot be extended to other shareholders.

The Investment Agreement allows each of the Subscribers having the Redemption Right in the event that the First Investment is completed but the Second Investment is not completed. We consider it is a reasonable commercial term given the Subscribers can provide an immediate fund to the Target Company after the First Completion and the terms of the First Investment and the Second Investment are substantially the same. Regarding the calculation formulas of compensation in respect of the anti-dilution rights enjoyed by the Subscribers, on the basis that (i) they were determined after arm’s length negotiation among the parties, which comprise of Subscriber A and other independent Subscribers, and the calculation basis remains the same to each of the Subscribers and (ii) the development of the Little Blue Book may take a considerable amount of time, particularly given the fact that it is currently launched for less than a year, we consider the calculation formulas serve as a mechanism to effectively safeguard the interests of the Subscribers, which are the first batch of investors to the Target Company, are crucial to the development of the Little Blue Book.

For the compensation rates of 10% per annum as stated under ‘‘(iii) Redemption Right’’ and 8% per annum as stated under ‘‘(v) Liquidation entitlement’’, on the basis that (i) they were determined after arm’s length negotiation among the parties; (ii) according to the Company’s 2018 annual report, we noted that the interest rates of interest-bearing bank borrowings of the Group ranged from 4.79% to 8.0% per annum for the year ended 31 December 2018; (iii) according to the 2019 Annual Report, the Group set up a limited partnership with two Independent Third Parties in May 2017 and entered into a repurchase agreement with them in November and December 2017, pursuant to which the Group will repurchase all the shares contributed by them in four years with fixed interest rates of 8.0% and 8.035% per annum, respectively, and such repurchase was pledged with the Group’s asset; (iv) the Target Company is still at its infancy stage of business which has not yet generated revenue and incurred net loss as at the Latest Practicable Date, which will generally be perceived by investors to demand a higher investment return when compared to the interest rates of the Group’s interest-bearing bank borrowings and the aforesaid repurchase agreement with the Independent Third Parties; and (v) the terms of the Subscriber A Investments are the same as those of other independent Subscribers, we consider such compensation rates, in particular given the outbreak of the novel coronavirus in the first quarter of 2020 which has added significant downward pressure to the domestic economy, are acceptable in the Investment Agreement.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

While the clause of ‘‘Liquidation entitlement’’ may compare unfavourably to the other clauses in the Investment Agreement, we have reviewed and assessed the terms of the Investment Agreement as a package. Taking into account of the reasons and benefits brought by the Investments as mentioned in the sub-section 1(iii) headed ‘‘Reasons for and benefits of entering into the Investment Agreement’’, overall speaking, we consider the terms of the Investment Agreements to be justifiable.

3. Information on the Target Company

(i) Background and business of the Target Company

The Target Company was established in May 2019 in the PRC and is owned as to approximately 69.62% and 24.68% by Hangzhou Jiahao and Tianjin Lance, respectively, both of which are indirect wholly-owned subsidiaries of the Company, and approximately 5.70% by Hangzhou Lanpeng, an Independent Third Party. As disclosed in the Letter from the Board, the Existing Target Company Shareholders are principally engaged in, among others, the provision of technology services and business information consulting services. The current registered capital of the Target Company amounted to approximately RMB13.2 million.

Since its incorporation, the Target Company commenced its commercial information searching business through the official launch of its self-published business information search tool, namely Little Blue Book. Little Blue Book is an online mobile application providing business information for users to search for in different aspects, principally covering commercial and financial information of enterprises.

As advised by the management of the Group, in respect of Little Blue Book, the Group plans to implement a number of development strategies, including but not limited to, developing its information technology systems and software, increasing the public awareness of its online platform through various marketing campaigns and continuously upgrading the functionality of the platform.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) Financial information of the Target Company

Based on the Target Company’s unaudited financial statements for the period since the date of incorporation up to 31 December 2019, the financial results and financial position of the Target Company are as follows:

a) Financial results

For the period since the date of incorporation up to 31 December 2019 RMB’000 (unaudited) Revenue – Costs of revenue (36,658) Net profit/(loss) before taxation (38,159) Net profit/(loss) after taxation (38,159)

As advised by the management of the Company, the Target Company has not generated any revenue since the date of incorporation up to 31 December 2019 as Little Blue Book is still in its infancy stage. The Target Company’s net loss after taxation of approximately RMB38.2 million mainly represented costs of revenue of approximately RMB36.7 million, which principally comprise of promotional fees paid to online distribution channel providers for the distribution of Little Blue Book.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

b) Financial position

Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Total equity	As at 31 December 2019 RMB’000 (unaudited) 242 3,890 4,132 – (41,791) (41,791) (37,659)

As at 31 December 2019, assets of the Target Company mainly comprised of (i) cash and cash equivalents of approximately RMB2.6 million; (ii) prepaid expenses of approximately RMB1.3 million; and (iii) intangible assets of approximately RMB0.2 million.

As at 31 December 2019, liabilities of the Target Company mainly comprised of (i) accounts payable of approximately RMB17.1 million, which principally comprised of promotional fees payable to online distribution channel providers for the distribution of Little Blue Book; and (ii) other payable of approximately RMB24.7 million, which principally comprised of advances from Hangzhou Zhenniu, a wholly-owned subsidiary of the Company, for working capital of the Target Company. As advised by the management of the Group, as at 31 March 2020, the unaudited total assets and net liability of the Target Company amounted to approximately RMB14.6 million and RMB1.0 million, respectively, primarily due to the conversion into the registered capital for the amount due to Hangzhou Jiahao and further investments made by Hangzhou Jiahao and Tianjin Lance in March 2020, respectively.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4. Evaluation of the Consideration

The Subscribers are now acquiring a total of 16.67% equity interests in the enlarged registered capital of the Target Company, for a Consideration of RMB40.0 million in aggregate. Upon the First Completion and the Second Completion, the Company’s equity interest in the Target Company will be reduced by a total of 15.71% and the Company is still able to consolidate the results of the Target Company into the financial statements of the Group.

The Target Company has neither generated any revenue nor profit since the commencement of its commercial information searching business since its incorporation. Further, as at 31 March 2020, it is in a net liability position with little cash balance (which is the major component of the total assets of the Target Company) for its normal daily operation. On this basis, we consider the typical valuation methodology using priceto-earnings, price-to-book and price-to-sale multiples to be not appropriate in valuing the Target Company.

Taking into account that (i) the Subscribers are acquiring not only the assets of the Target Company, but also the development potential of the Little Blue Book as explained in the sub-section 1(ii) headed ‘‘Background of entering into the Investment Agreement’’; (ii) the business of the Target Company which, if successful, may improve the financial performance and position of the Group by broadening the Group’s business; (iii) the Group is still having a controlling stake in the Target Company upon the First Completion and the Second Completion; and (iv) the Target Company is in a net liability position with little cash for its normal daily operation and the Consideration serves to provide an immediate fund to the Target Company, we consider the Consideration is fair and reasonable.

5. Financial effects of the Deemed Disposal

(i) Net assets and earnings

Following the completion of the Deemed Disposal (including the First Completion and the Second Completion in aggregate), the Company’s aggregate equity interest in the Target Company would be diluted from approximately 94.30% to approximately 78.59%. As disclosed in the Letter from the Board, it is expected that the Target Company will continue to remain as a non-wholly owned subsidiary of the Company. The financial result and financial position of the Target Company would therefore continue to be consolidated into the financial statements of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Given the Deemed Disposal does not result in a change of control, it will not recognise any gain or loss in the Group’s consolidated income statement. It is not expected that significant contribution will be made by the Target Company to the consolidated profit of the Group in the near term, given that Little Blue Book is still in its infancy stage. In addition, the Investments is not expected to result in material change in the Company’s net assets position.

(ii) Working capital

As advised by the management of the Company, the Consideration received from the Deemed Disposal will be used as working capital of the Target Company for the development, promotion and operation of Little Blue Book. Following the completion of the Deemed Disposal, the total Consideration of RMB40.0 million will be fully injected into the Target Company, thus alleviating the financial burdens of the Company regarding the future potential investments to the Target Company.

The Directors, after taking into account of the Group’s internal resources and present available banking facilities, have confirmed that the Group will have sufficient working capital for its present requirements for at least the next 12 months from the Latest Practicable Date in the absence of any unforeseen circumstances.

OPINION AND RECOMMENDATION

Having taken into account the above principal factors and reasons, we consider that the Investment Agreement is on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned. We also consider that the entering into of the Investment Agreement is in the ordinary and usual course of business of the Company and in the interests of the Company and its shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Investment Agreement and the Proposed Transactions.

Yours faithfully, For and on behalf of Rainbow Capital (HK) Limited Danny Leung Managing Director

Mr. Danny Leung is a licensed person and a responsible officer of Rainbow Capital (HK) Limited registered with the Securities and Futures Commission to carry out type 6 (advising on corporate finance) regulated activity under the SFO. He has over 10 years of experience in the corporate finance industry.

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GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY OF THE DIRECTORS

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ and chief executives’ interests in the Company and its associated corporations

Save as disclosed below, as at the Latest Practicable Date, none of the Directors and chief executives of the Company or their respective associates had any interest or short position in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules:

The Company

Name of Directors Capacity and nature of interest Mr. Sun Founder of a discretionary trust, who can affect the trustee how to exercise discretionary trust Others Others Mr. Yang Yuzhi Beneficial owner Ms. Zou Yunli Interest of spouse	Number of Shares 120,076,000(2) 50,355,000(3) 245,140,736(4) 415,571,736 7,000,000 200,000(5)	Approximate percentage of issued Shares(1) 10.08% 4.23% 20.57% 34.87% 0.59% 0.02%

Notes:

(1) The calculation is based on the number of Shares as a percentage of the total number of issued Shares (i.e. 1,191,653,522 Shares) as at the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX I

(2) Rising Sun Limited, which is the beneficial owner of the 120,076,000 Shares, is wholly owned by Wukong Ltd. Wukong Ltd. is beneficially wholly owned by Wukong Trust, which was established by Mr. Sun as the settlor. TMF (Cayman) Ltd. is the trustee of Wukong Trust. Mr. Sun, as the beneficiary of Wukong Trust, is taken to be interested in those Shares.
(3) Rising Sun Limited entered into a limited partnership agreement with Tai Yong Holdings Ltd on 13 October 2017, as amended and restated on 17 November 2017 (the ‘‘Limited Partnership Agreement’’), for the purpose of establishing 51 Xinhu L.P., a Cayman Islands exempted limited partnership and regulating the activities and operation of the partnership. Pursuant to the Limited Partnership Agreement, Rising Sun Limited serves as the general partner and Tai Yong Holdings Ltd serves as the limited partner. In addition, Rising Sun Limited has the power to exercise all voting rights on behalf of 51 Xinhu L.P. As 51 Xinhu L.P. is the beneficial owner of the 50,355,000 Shares, and by virtue of the SFO, Mr. Sun is deemed to be interested in the 50,355,000 Shares and the share capital of its associated corporation in which Rising Sun Limited is or is deemed to be interested.
(4) The Company entered into a voting proxy agreement (the ‘‘Voting Proxy Agreement’’) with Rising Sun Limited, 51 Stock Limited, 51 Award Limited, Tiantu Investments Limited, MSK XF Holding Ltd, LF Alpha Ltd and Achieve Success Technology Development Limited (other than the Company, each, a ‘‘Party to the Voting Proxy Agreement’’, collectively, the ‘‘Parties to the Voting Proxy Agreement’’). Pursuant to the Voting Proxy Agreement, Rising Sun Limited is entitled to exercise, in its sole discretion, all the voting powers associated with the 245,140,736 Shares on behalf of the Parties to the Voting Proxy Agreement on all matters submitted to a vote of Shareholders at any meeting of Shareholders. By virtue of the SFO, Mr. Sun is deemed to be interested in the 245,140,736 Shares and the share capital of its associated corporation in which Rising Sun Limited is or is deemed to be interested.
(5) Mr. Li Anxin, the spouse of Ms. Zou Yunli, is the beneficial owner of the 200,000 Shares. By virtue of the SFO, Ms. Zou Yunli is deemed to be interested in the Shares held by her spouse.

Associated Corporation

				Approximate
			Number of	percentage of
Name of Director	Name of associated corporation	Capacity and nature of interest	shares	issued shares(1)
Mr. Sun	China Netcom Technology	Interest in controlled corporation	1,834,963,213(3)	39.28%
	Holdings Limited(2)

Notes:

(1) The calculation is based on the number of Shares as a percentage of the total number of issued Shares (i.e. 1,191,653,522 Shares) as at the Latest Practicable Date.
(2) The shares of China Netcom Technology Holdings Limited are listed on GEM of the Stock Exchange (stock code: 8071).
(3) These shares are directly held by 51RENPIN.COM INC. 51RENPIN.COM INC. is wholly owned by 上海悟牛網絡科技有限公司 (transliterated as Shanghai Wuniu Network Technology Company Limited), which is in turn wholly owned by 杭州恩牛網絡技術有限公司 (transliterated as Hangzhou Enniu Network Technology Co., Ltd.) (‘‘Hangzhou Enniu’’). Mr. Sun is indirectly interested in approximately 26.94% of the equity interest in Hangzhou Enniu. Further, contractual arrangements are entered into between Hangzhou Zhenniu (a company wholly owned by 51 Credit Card (China) Limited, which is in turn wholly owned by the Company and ultimately controlled by Mr. Sun) and Hangzhou Enniu so that Hangzhou Zhenniu can control Hangzhou Enniu. By virtue of the SFO, Mr. Sun is deemed to be interested in those shares held by 51RENPIN.COM INC.

– 44 –

GENERAL INFORMATION

APPENDIX I

(b) Substantial shareholders’ interests

Save as disclosed below, as at the Latest Practicable Date, so far as was known to the Directors, there was no other person (other than the Directors and chief executives of the Company) who had any or deemed to have an interest or a short position in the Shares or underlying Shares which (i) were required to be notified to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO, or (ii) were required, pursuant to section 336 of the SFO, to be recorded in the register of the Company referred to therein, or (iii) had already been notified to the Company and the Stock Exchange:

Name(s) Capacity and nature of interests Mr. Huang Wei(2) Interest in controlled corporation Ms. Li Ping(3) Interest of spouse Zhejiang Xinhu Group Co., Ltd.(4) Interest in controlled corporation Xinhu Zhongbao Co., Ltd.(4) Interest in controlled corporation Hong Kong Xinhu Investment Co., Limited(4) Interest in controlled corporation Taichang Investment Limited(4) Beneficial owner Tai Shun Holdings Ltd.(4) Beneficial owner EasternGate SPC(4) Security interest TMF (Cayman) Ltd.(5) Trustee Wukong Ltd.(5) Interest in controlled corporation Other Other Rising Sun Limited(5) Beneficial owner Other Other Mr. Wang Yonghua(6) Interest in controlled corporation Interest in controlled corporation Interest in controlled corporation Tian Tu Capital Co., Ltd*(6) Interest in controlled corporation Tiantu Advisory Company Limited(6) Interest in controlled corporation Tiantu Investments Limited(6) Beneficial owner The Core Trust Company Limited(7) Trustee TCT (BVI) Limited(7) Other 51 Stock Limited(7) Beneficial owner 51 Award Limited(7) Beneficial owner	Number of Shares directly or indirectly held and category(8) 260,686,000 260,686,000 260,686,000 260,686,000 260,686,000 109,217,000 101,114,000 210,331,000 415,571,736 120,076,000 50,355,000 245,140,736 415,571,736 120,076,000 50,355,000 245,140,736 415,571,736 95,328,000 55,213,000 3,195,000 153,736,000 150,541,000 95,328,000 95,328,000 186,398,642 186,398,642 87,330,881 99,067,761	Approximate percentage of issued Shares(1) 21.88% 21.88% 21.88% 21.88% 21.88% 9.17% 8.49% 17.65% 34.87% 10.08% 4.23% 20.57% 34.87% 10.08% 4.23% 20.57% 34.87% 8.00% 4.63% 0.27% 12.90% 12.63% 8.00% 8.00% 15.64% 15.64% 7.33% 8.31%

The English name(s) has/have been transliterated from its/their respective Chinese name(s) and is/are for identification only.

– 45 –

GENERAL INFORMATION

APPENDIX I

Notes:

(1) The calculation is based on the number of Shares which each party is interested in (whether directly or indirectly interested or deemed to be interested) as a percentage of the total number of issued Share (i.e. 1,191,653,522 Shares) as at the Latest Practicable Date.
(2) Zhejiang Xinhu Group Co., Ltd. (‘‘Zhejiang Xinhu’’) is held as to 67.22% by Mr. Huang Wei. By virtue of the SFO, Mr. Huang Wei is deemed to be interested in the Shares in which Zhejiang Xinhu is deemed to be interested. For details of Zhejiang Xinhu’s deemed interests, please refer to note (4) below.
(3) Ms. Li Ping is the spouse of Mr. Huang Wei, and thus is deemed to be interested in the Shares in which Mr. Huang Wei is deemed to be interested under the SFO.
(4) 109,217,000 Shares and 101,114,000 Shares are directly held by Taichang Investment Limited and Tai Shun Holdings Ltd., respectively, and have been pledged in favour of EasternGate SPC. Taichang Investment Limited and Tai Shun Holdings Ltd. both are wholly owned by Hong Kong Xinhu Investment Co., Limited, which is in turn wholly owned by Xinhu Zhongbao Co., Ltd. (‘‘Xinhu Zhongbao’’). Xinhu Zhongbao is deemed to be controlled by Zhejiang Xinhu under the SFO. Therefore, under the SFO, each of Hong Kong Xinhu Investment Co., Limited, Xinhu Zhongbao and Zhejiang Xinhu is deemed to be interested in the Shares in which each of Taichang Investment Limited and Tai Shun Holdings Ltd. is deemed to be interested. 50,355,000 Shares are directly held by 51 Xinhu L.P., which is wholly owned by Tai Yong Holdings Ltd. Tai Yong Holdings Ltd is wholly owned by Hong Kong Xinhu Investment Co., Limited, which is in turn wholly owned by Xinhu Zhongbao. Xinhu Zhongbao is deemed to be controlled by Zhejiang Xinhu under the SFO. Therefore, under the SFO, each of Tai Yong Holdings Ltd, Hong Kong Xinhu Investment Co., Limited, Xinhu Zhongbao and Zhejiang Xinhu is deemed to be interested in the Shares held by 51 Xinhu L.P.
(5) Same for the interests as disclosed in Notes (2) to (4) in the section headed ‘‘Directors’ and chief executives’ interests in the Company and its associated corporations’’ in this appendix to this circular.
(6) 95,328,000 Shares are directly held by Tiantu Investments Limited. Tiantu Investments Limited is wholly owned by Tiantu Advisory Company Limited, which is in turn wholly owned by 深圳市天圖投資管理股份有限公司 (transliterated as Tian Tu Capital Co., Ltd.) (‘‘Tian Tu Capital’’). 55,213,000 Shares are directly held by Tiantu Xingbei Investments Limited Company (‘‘Tiantu Xingbei’’), which is indirectly-owned by Tian Tu Capital. Mr. Wang Yonghua holds 59.80% shareholding interest in Tian Tu Capital. Therefore, under the SFO, Tiantu Advisory Company Limited is deemed to be interested in the Shares held by Tiantu Investments Limited, and each of Tian Tu Capital and Mr. Wang Yonghua is deemed to be interested in the Shares held by Tiantu Investments Limited and Tiantu Xingbei. 3,195,000 Shares are directly held by Tiantu China Consumer Fund I, LP, which is in turn indirectlyowned by Mr. Wang Yonghua. Therefore, under the SFO, Mr. Wang Yonghua is deemed to be interested in the Shares held by Tiantu China Consumer Fund I, LP.
(7) Both 51 Stock Limited and 51 Award Limited are wholly owned by TCT (BVI) Limited, which is in turn wholly owned by The Core Trust Company Limited. The Core Trust Company Limited is the trustee and each of 51 Stock Limited and 51 Award Limited is the nominee to administer the restricted share unit (the ‘‘RSU’’) schemes. Each of 51 Stock Limited and 51 Award Limited holds the Shares underlying the RSUs granted by the Company for the benefit of eligible participants pursuant to the RSU schemes.
(8) All Shares being held are long position.

– 46 –

GENERAL INFORMATION

APPENDIX I

3. MATERIAL ADVERSE CHANGES

As at the Latest Practicable Date, the Directors are not aware of any material adverse changes in the financial or trading position of the Group since 31 December 2019, being the date to which the latest published audited financial statements of the Group were made up.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any of its subsidiaries which is not terminable within one year without payment of compensation (other than statutory compensation).

5. COMPETING INTERESTS

As at the Latest Practicable Date, the Directors were not aware that any of them or any of their close associates had interests in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group which would fall to be disclosed under the Listing Rules.

6. OTHER ARRANGEMENTS INVOLVING DIRECTORS

As at the Latest Practicable Date:

(a) none of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date and which was significant in relation to the business of the Group; and
(b) none of the Directors had any direct or indirect interest in any assets which had been since 31 December 2019 (being the date to which the latest published audited financial statements of the Group were made up), (i) been acquired or disposed of by; or (ii) leased to; or (iii) were proposed to be acquired or disposed of by; or (iv) were proposed to be leased to any member of the Group.

– 47 –

GENERAL INFORMATION

APPENDIX I

7. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualification of the expert who has given opinion or advice, which are contained or referred to in this circular:

Name Qualification

Rainbow Capital a corporation licensed under SFO to carry out type 6 (advising on corporate finance) regulated activity

As at the Latest Practicable date, the above expert:

(a) has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter dated 11 May 2020 and/or references to its name or opinion, in the form and context in which it appears;
(b) did not have beneficially interested in the share capital of any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and
(c) did not have any direct or indirect interest in any assets which had been since 31 December 2019 (being the date to which the latest published audited financial statements of the Group were made up), been acquired, or disposed of by, or leased to any member of the Group or were proposed to be acquired or disposed of by, or leased to any member of the Group.

8. MISCELLANEOUS

This circular is prepared in both English and Chinese. In the event of inconsistency, the English text shall prevail.

9. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the following documents will be made available for inspection during normal business hours on any weekday (excluding Saturdays, Sundays and public holidays) at the principal place of business of the Company in Hong Kong at Unit 1006, 10th Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong up to and including the date of the EGM.

(i) the Investment Agreement;
(ii) the letter from the Independent Board Committee, the text of which is set out on page 26 of this circular;
(iii) the letter from the Independent Financial Adviser, the text of which is set out on pages 27 to 42 of this circular;
(iv) the letter of consent from Rainbow Capital referred to in the above paragraph headed ‘‘QUALIFICATION AND CONSENT OF EXPERT’’ in this Appendix to this circular; and
(v) this circular.

– 48 –

NOTICE OF EGM

==> picture [80 x 36] intentionally omitted <==

51 CREDIT CARD INC. 51 信用卡有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2051)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the ‘‘EGM’’) of 51 Credit Card Inc. (the ‘‘Company’’) will be held at United Conference Centre, 10/F., United Centre, 95 Queensway, Admiralty, Hong Kong on Friday, 29 May 2020 at 11:15 a.m. or any adjournment thereof to consider and, if thought fit, pass the following resolution as an ordinary resolution (with or without modifications):

ORDINARY RESOLUTION

‘‘THAT:
(a) the Investment Agreement (as defined and described in the circular to the shareholders of the Company dated 11 May 2020, a copy of which has been produced to the EGM marked ‘‘A’’ and initialled by the Chairman of the EGM for the purpose of identification) and the execution thereof and implementation of the transactions thereunder be and are hereby approved, ratified and confirmed; and
(b) any director of the Company be and is hereby authorized to sign, execute, perfect and deliver all such documents and do all such deeds, acts, matters and things as he may in his absolute discretion consider necessary or desirable for the purpose of or in connection with the implementation of the Investment Agreement and other matters contemplated thereunder or ancillary thereto, to waive compliance from and/or agree to any amendment or supplement to the Investment Agreement which in his opinion is not of a material nature and to effect or implement any other matters referred to in this resolution.’’

By order of the Board 51 Credit Card Inc. Sun Haitao

Chairman, Chief Executive Officer and Executive Director

11 May 2020

– 49 –

NOTICE OF EGM

As at the date hereof, the Board comprised the following Directors:

Executive Directors: Mr. Sun Haitao (Chairman and Chief Executive Officer) Mr. Yang Yuzhi (Vice-president) Mr. Zhao Ke (Chief Financial Officer)

Non-executive Director: Ms. Zou Yunli

Principal place of business in Hong Kong: Unit 1006, 10th Floor Tower One, Lippo Centre 89 Queensway Hong Kong

Independent non-executive Directors: Mr. Wong Ti Mr. Ye Xiang Mr. Xu Xuchu

Notes:

(a) Any Shareholder entitled to attend and vote at the above meeting is entitled to appoint one or, if he/she is the holder of two or more Shares, more than one proxy to attend and vote on his/her behalf in accordance with the articles of association of the Company. A proxy need not be a Shareholder.
(b) In order be valid, a form of proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of such power or authority must be deposited at the Company’s Hong Kong share registrar, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time for holding the above meeting or any adjournment thereof.
(c) Delivery of an instrument appointing a proxy shall not preclude a Shareholder from attending and voting in person at the above meeting or any adjournment thereof and in such event, the instrument appointing a proxy shall be deemed to be revoked.
(d) In the case of joint holders of a Share, any one of such joint holders may vote, either in person or by proxy, in respect of such Share as if he/she was solely entitled thereto; if more than one of such joint holders are present at the above meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of Shareholders in respect of the joint holding.
(e) For the purpose of determining the Shareholders who are qualified for attending and voting at the above meeting, the register of members of the Company will be closed from Monday, 25 May 2020 to Friday, 29 May 2020, both days inclusive, during which no transfer of Shares will be registered. In order to be eligible to attend and vote at the above meeting, all share transfers accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong share registrar, Tricor Investor Services Limited of Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not later than 4:30 p.m. on Friday, 22 May 2020.
(f) If a typhoon signal number 8 or above is hoisted or a ‘‘black’’ rainstorm warning signal is in force at or at any time after 8 a.m. on the date of the above meeting, the above meeting will be adjourned. An announcement will be posted on the websites of the Company and the Stock Exchange to notify the Shareholders of the date, time and place of the adjourned meeting. The above meeting will be held as scheduled when an amber or a red rainstorm warning signal is in force. Shareholders should decide on their own whether they would attend the above meeting under bad weather conditions bearing in mind their own situations.
(g) If any Shareholders have any particular access request or special needs for participating in the above meeting, please contact the Company’s Hong Kong share registrar, Tricor Investor Services Limited (telephone: +852 2980 1333) on or before Friday, 22 May 2020.

– 50 –

AI assistant

Vala Inc. — Proxy Solicitation & Information Statement 2020

50359_rns_2020-05-11_e5afe1f4-8406-4456-b1ed-d2fe5c7f01a0.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

51 CREDIT CARD INC. 51 信用卡有限公司

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE DEEMED DISPOSAL OF INTEREST IN THE TARGET COMPANY

PRECAUTIONARY MEASURES FOR THE EGM

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

51 CREDIT CARD INC. 51 信用卡有限公司

DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO

THE DEEMED DISPOSAL OF INTEREST IN THE TARGET COMPANY

INTRODUCTION

As at the Latest Practicable Date:

(Registered capital: RMB15,802,466)

THE INVESTMENT AGREEMENT

Date

Parties

Consideration

The First Investment

LETTER FROM THE BOARD

Conditions precedent to the First Completion

LETTER FROM THE BOARD

The Second Investment

Conditions precedent to the Second Completion

Redemption Right

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Anti-dilution of the equity interest of the Subscribers

MULTIPLIED BY

registered capital held by the Subscribers

MULTIPLIED BY

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Other terms

Liquidation entitlement

LETTER FROM THE BOARD

Management and operation of the Target Company

INFORMATION OF THE PARTIES

The Subscribers

LETTER FROM THE BOARD

Information of the Group

Information of the Target Company

LETTER FROM THE BOARD

Information of Hangzhou Jiahao

Information of Tianjin Lance

Information of Hangzhou Lanpeng

Information of Hangzhou Zhenniu

REASONS FOR AND BENEFITS OF ENTERING INTO THE INVESTMENT AGREEMENT AND USE OF PROCEEDS

FINANCIAL EFFECTS OF THE INVESTMENTS TO THE GROUP

LISTING RULES IMPLICATIONS

(i) The Investment Agreement and the Deemed Disposal

(ii) The Redemption Right and the anti-dilution right

EGM

LETTER FROM THE BOARD

RECOMMENDATIONS

FURTHER INFORMATION

51 CREDIT CARD INC. 51 信用卡有限公司 (Incorporated in the Cayman Islands with limited liability)

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE DEEMED DISPOSAL OF INTEREST IN THE TARGET COMPANY

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE DEEMED DISPOSAL OF INTEREST IN THE TARGET COMPANY

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background to and reasons for entering into the Investment Agreement

(i) The Group

(ii) Background of entering into the Investment Agreement

(iii) Reasons for and benefits of entering into the Investment Agreement

2. Principal terms of the Investment Agreement

(i) Subject matter

(ii) Consideration

(iii) Redemption Right

(iv) Anti-dilution of the equity interest of the Subscribers

(v) Liquidation entitlement

(vi) Composition of the board of directors of the Target Company

Overall comment

3. Information on the Target Company

Vala Inc. Proxy Solicitation & Information Statement 2020