Proficient Alpha Acquisition Corporation

Proficient Alpha Acquisition Corporation

Oct 19, 2020 by viktoria.v

PROPOSED BUSINESS COMBINATION: Lion Financial Group Limited


ESTIMATED CURRENT FUNDS in TRUST: $117.1 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.19*
ENTERPRISE VALUE: $125.0 million

 

*SPACInsider estimate a/o 6-4-20

Proficient Alpha Acquisition Corp. proposes to combine with Lion Financial Group Limited, a British Virgin Islands corporation (“Lion”) and Hong Kong-based diversified financial services company, in a transaction valued at approximately $125 million.

TRANSACTION SUMMARY

At the closing of the transactions, a newly formed Cayman Islands holding company (“Pubco”) will acquire 100% of the issued and outstanding shares of Lion in exchange for newly issued shares of Pubco, and Proficient will merge with a newly formed subsidiary of Pubco. Following the Transaction, each of Proficient and Lion will become a wholly-owned subsidiary of Pubco. The Transaction closing is currently expected to occur in the second calendar quarter of 2020.

The value of the Pubco shares to be issued to the Lion shareholders at the closing will be based on an enterprise value of Lion of $125 million, subject to adjustment based on Lion’s net debt, transaction expenses and working capital as of the closing.

In the Transaction, certain Lion shareholders currently owning approximately 75% of the issued and outstanding capital shares of Lion will receive new Pubco Class B stock entitling them to 10 votes per share. Assuming no redemption by Proficient shareholders and no purchase price adjustments, immediately following the closing, the current shareholders of Lion and Proficient are expected to hold approximately 44% and 56% of the economic value of the issued and outstanding shares of Pubco, respectively. Holders of the Pubco Class B stock collectively are expected to hold a majority of the voting power of Pubco following the closing.

As part of the transaction, 45% of the Pubco shares being issued to Lion shareholders in the form of Pubco Class B stock will be placed into escrow, with 15% to be used to satisfy post-closing purchase price adjustments and indemnification claims and 30% subject to vesting upon Lion satisfying certain net income milestones.

All cash remaining in Proficient at the closing of the Transaction after paying off transaction expenses and Proficient liabilities is expected to be used for Lion’s growth.

Lion operates state-of-the-art trading platforms that offer a wide spectrum of products and services, with a focus on Chinese investors. Lion’s products and services include:

  • Contract-for-difference (CFD) trading services
  • Insurance agency services
  • Futures brokerage services
  • Securities brokerage services
  • Asset management services

Lion enables these services through a variety of applications available on iOS, Android, PC and Mac platforms. Lion’s clients are concentrated on well-educated and affluent Chinese investors residing inside and outside the PRC (other than in the United States), as well as institutional clients in Hong Kong that use its futures brokerage service.


EXCHANGE CONSIDERATION

 The total consideration to be paid by Pubco to the Sellers for the Purchased Shares shall be an aggregate number of Pubco ordinary shares (the “Exchange Shares”) with an aggregate value (the “Exchange Consideration”) equal to, without duplication,

  • $125,000,000, plus (or minus, if negative)
  • Lion’s net working capital less a target net working capital of $815,000, minus
  • The aggregate amount of any outstanding indebtedness, net of cash and cash equivalents, of Lion and its subsidiaries, and minus
  • The amount of any unpaid transaction expenses of Lion, with each Pubco ordinary share to be issued to the Sellers valued at a price equal to the price at which each share of Proficient common stock is redeemed (the “Redemption Price”) pursuant to the redemption by Proficient of its public stockholders in connection with Proficient’s initial business combination
  • Jian Wang, the Chairman of Lion (the “Main Seller”), and Legacy Success Ventures Limited (collectively, the “Class B Sellers”), shall each receive solely Pubco Class B ordinary shares (the “Class B Exchange Shares”) and all of the other Sellers (the “Class A Sellers”) shall receive solely Pubco Class A ordinary shares (the “Class A Exchange Shares”).
  • The Pubco Class A ordinary shares and the Pubco Class B ordinary shares will be identical in rights except that the Class B ordinary shares will
    • Entitle the holder to 10 votes per share and
    • Be convertible, at the election of the holder, into Pubco Class A ordinary shares on a one-to-one basis.

The Exchange Consideration is subject to adjustment after the Closing based on final confirmation of Lion’s net working capital, the outstanding indebtedness of Lion and its subsidiaries net of cash and cash equivalents, and any unpaid transaction expenses of Lion, as of the date of the Closing. If the finally determined number of Exchange Shares is

  • Greater than the estimated number of Exchange Shares, Pubco will issue an additional number of Pubco Class A ordinary shares and Pubco Class B ordinary shares equal to such difference to the Sellers, subject to a maximum amount equal to the amount of Indemnity Escrow Property (read Earnout section below) at such time or
  • Less than the estimated number of Exchange Shares, Pubco will cause the Escrow Agent (as defined below) to release from escrow a number of Indemnity Escrow Shares equal to such difference to Pubco, subject to a maximum amount equal to the Indemnity Escrow Property at such time.

EARNOUT

  • Equal to thirty percent (30%) of the estimated Exchange Consideration
  • Together with any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted the “Earnout Escrow Shares” together with the Indemnity Escrow Shares, the “Escrow Shares”) to be held, along with any dividends, distributions or income thereon (together with the Earnout Escrow Shares, the “Earnout Escrow Property”) in a segregated account (the “Earnout Escrow Account”) and disbursed in accordance with the Business Combination Agreement and the Escrow Agreement.
    • Net income for the calendar year ended December 31, 2021 (the “2021 Net Income”), is equal to or greater than $19,000,000 (the “First Net Income Target”), then,
      • The Class B Sellers’ rights to 50% of the Earnout Escrow Property (the “First Half Earnout Property”) shall vest and shall no longer be subject to forfeiture.
      • If the 2021 Net Income is less than the First Net Income Target, but is equal to or greater than $9,500,000, then the Class B Sellers’ rights to 50% of the First Half Earnout Property shall vest and shall no longer be subject to forfeiture.
      • In all other cases, the First Half Earnout Property will be forfeited.
    • Net income for the calendar year ended December 31, 2022 (the “2022 Net Income”), is equal to or greater than $21,850,000 (the “Second Net Income Target”), then
      • The Class B Sellers’ rights to the remaining Earnout Escrow Property (after giving effect to any forfeitures for the 2021 calendar year, the “Second Half Earnout Property”) shall vest and shall no longer be subject to forfeiture.
      • If the 2022 Net Income is less than the Second Net Income Target, but is equal to or greater than $10,925,000, then the Class B Sellers’ rights to 50% of the Second Half Earnout Property shall vest and shall no longer be subject to forfeiture.
      • In all other cases, the Second Half Earnout Property will be forfeited.

NOTABLE CONDITIONS TO CLOSING

  • Proficient having at least $5,000,001 in net tangible assets as of the Closing, after giving effect to the completion of the Redemption and any private placement financing

NOTABLE CONDITIONS TO TERMINATION

  • By either Proficient or Lion if the Closing has not occurred on or prior to June 3, 2020 (the “Outside Date”)

LOCK-UP

  • Seller“Lock-Up Period”:  commencing from the Closing and ending on the six (6) month anniversary of the Closing

MANAGEMENT & BOARD

Following the closing of the Transaction, the newly formed company will be led by Lion’s current management team, with:

  • Mr. Wilson (Chunning) Wang as Chief Executive Officer
  • Mr. Hua Luo as Chief Operating Officer
  • Mr. Jian Wang as Chairman of the Board of Directors.

ADVISORS

  • I-Bankers Securities, Inc. is acting as the financial advisor to Proficient.
  • Ellenoff Grossman & Schole LLP is acting as Proficient’s U.S. legal advisors.
  • Harneys is acting as its Cayman Islands legal advisors.
  • Han Kun is acting as its Hong Kong legal advisors.
  • Kirkland & Ellis LLP is acting as U.S. legal advisors to Lion.
  • Ogier is acting as its Cayman Islands legal advisors
  • O Tse & Co. is acting as its Hong Kong legal advisors.

PROFICIENT ALPHA MANAGEMENT & BOARD


Executive Officers

Kin Sze, 48
Co-Chief Executive Officer, President and Secretary

Mr. Sze has been serving as a Managing Director at Zhuhai Zhonghe Sifang Asset Management Limited, a private equity asset management company, since March 2019. Prior to that he served as an Executive Director at Agricultural Bank of China International, Hong Kong, an investment banking business flagship of Agricultural Bank of China, one of the largest banks in the world by total assests, from December 2017 to December 2018. He played an instrumental role in managing the company’s direct investment portfolio. Prior to that, he was a Senior Manager at China Everbright, (Hong Kong), a China based finance conglomerate with business in banking, securities, insurance, asset management and direct investment, from April 2006 to November 2017. He was involved in a number of acquisitions in fintech, TMT, advanced manufacturing, real estate, etc. Mr. Sze received an MBA degree from the University of South Australia and a bachelor’s degree in Chemical Engineering from the University of Toronto. Mr. Sze is a Chartered Financial Analyst (“CFA”) Charterholder, Fellow of Institute of Public Accountants and Institute of Financial Accountants.


Wei Fan, 32
Co-Chief Executive Officer and Director (Class II)

Mr. Fan has been a portfolio manager at Alpha Square Group, a private equity firm, since November 2017. Mr. Fan served as a vice president of portfolio management at Citi Group from September 2016 to October 2017. He was a senior financial analyst at Cybernaut Investment Group, a private equity firm, in Beijing from July 2014 to August 2016 and an associate at Alliance Bernstein, an investment management and research firm, from June 2012 to June 2014. Mr. Fan received a Master of Science degree in applied mathematics from Stevens Institute of Technology and a Bachelor of Science degree in applied mathematics from East China University of Science and Technology. Mr. Fan has been awarded the Chartered Financial Analyst (“CFA”) designation.


Weixuan Luo, 45
Chief Financial Officer

Mr. Luo is a founding partner of L&L CPAS, PA, a PCAOB registered public accounting firm since October 2013. She has also been serving as the President of American Aeolian Travel Inc., a travel agency, since May 2012. She has been a Senior Manager at Greentree Financial Group Inc. providing financial advisory services to public companies since May 2003. Ms. Luo has worked with publicly traded companies for over a decade in a broad array of services, including audits, tax preparation, risk assessment, financial analysis and financial statements preparation. Ms. Luo has also been engaged as an advisor on over 50 merger and acquisitions transactions for both private and public companies during her career. Ms. Luo is Certified Public Accountant in North Carolina and Florida and a member of American Institute of CPAs. Ms. Luo received her Master’s degree in Economics and Finance from the University of North Carolina.


 

Board of Directors

Jing Chen, 39
Director (Class I)

Ms. Chen has been serving as a Managing Director and Partner at Guangzhou Boxun Investment Management Co., Ltd. since January 2010, primarily working on merger and acquisitions, asset management and financial advisory business in capital markets in Asia. She was involved in a number of sizable fund raising projects. She has also been serving as a director of Co-op Infinity Asset Management Co., Ltd., a PE fund management company, since December 2017 and a director of Broad-wise Healthy Industry Investment (Guangzhou) Co., Ltd. since February 2018. Ms. Chen started her career at Citibank in 2002. She received an MBA degree in finance from University of Illinois at Chicago and a Bachelor’s degree in economics from Guangdong University of Foreign Studies.


Man Hung Wong, 62
Independent Director (Class I)

Mr. Wong is an expert on foreign-exchange, commodity, stock, bond and global financial market. He has more than 30 years of investment experience and is one of the most popular financial market commentators in Hong Kong. Prof. Wong has taught MBA courses in Mainland China, Hong Kong and Macau since 1997, and has written columns in Hong Kong newspapers for more than 20 years. Mr. Wong is a financial columnist at King Wealth Group Limited since August 2008. He served as Vice Chairman and Executive Director at Agritrade Resource Limited (HKSE:1131), a company listed on the main board of the Hong Kong Stock Exchange, from September 2014 to May 2016. He served as the Chief Strategist of Crown One Asset Management Company Limited since April 2010 to December 2015. He also served as the Chairman of Code Agriculture Holdings Limited from April 2008 to August 2014. He is currently a member of the Chartered Management Institute, the Associate of Cost and Executive Accountants and the Association of Taxation and Management Accountants.


John Bode, 44
Independent Director (Class I)

Mr. Bode has been serving as the Chief Operating Officer of Readerlink Distribution Services, LLC, since October 1, 2018. He has also been serving a director of Postmedia Network Canada Corp. since October 2018 and Fision Corporation since March 2018. Prior to joining us, Mr. Bode owned and operated Aeire Investments, LLC, a strategic consultancy practice focused on working with companies, ranging from legacy media enterprises to digital start-ups, undertaking major transformation initiatives and transactions from February 2015 to September 2018. From September 2013 to January 2015, he was the Chief Financial Officer of Tribune Publishing Company (now Tronc, Inc, (NASDAQ: TRNC)). He started his career as an accountant at BDO Seidman from 1996 to 2002. Mr. Bode received his Bachelor’s degree in accounting from University of Notre Dame.


Walter Cook, 64
Independent Director (Class II)

Mr. Cook is a proven executive and expert in the banking and financial Sector with a strong leadership history of commercial banks and securities firms. He has extensive experience in turnarounds, acquisitions, and start-up financial institutions. Since August 2016, Mr. Cook has been a Managing Director at Tangent Capital Partners, LLC, an investment bank serving investment advisors and asset managers, and provided critical expertise in roll out of The Community Development Fund (CDCDX), a CRA-qualified mutual fund for commercial banks to Dr. Kenneth H. Thomas, CDCDX’s adviser. He was an independent consultant from January 2015 to July 2016, and an expert witness providing expert opinions and trial testimony on lending and banking practices in Florida State Court and Federal bankruptcy Court in Boston, Massachusetts from January 2014 to December 2015. Mr. Cook served as the CEO and the chairman of the board of the Republic Federal Bancorp, Inc. from 2003 to 2010. Mr. Cook received a Master’s degree in business administration specializing in finance and marketing from Harvard University in 1982, a Master’s degree in law and diplomacy from Tufts University in 1978 and a Bachelor’s degree in political science & psychology from Duke University.


Di Chen, 42
Independent Director (Class II)

Mr. Chen has over 20 years of extensive experience in the financial industry, 12 years of which has been with the senior management team. He joined Harvest Global Capital Investments Limited (“HGCI”) in May 2005 and took the current roles as Managing Director and CEO in May 2016. HGCI is an affiliate of Harvest Global Investments, one of the largest asset management firms in China with over $121 billion asset under management. Mr. Chen received both his Bachelor’s and Master’s degrees in finance from Jinan University.


Shih-Chung Chou, 58
Director (Class II)

Mr. Shih-Chung Chou, age 58, has over 20 years of experience in establishing and leading successful business ventures in the finance and real-estate industries in Asia, especially China. He is the founder and shareholder of National Agricultural Holding Limited, a rural market-based company that integrates financial services, agricultural product trading, information, industry and science research. He has been serving as the Chief Executive Officer of Shanghai Kongsheng Industrial Co., Ltd., a real estate development, investment and management company, since February 1997. From June 2005 to November 2013, he served as the M&A Department Manager of Qianlong Technology International Holding Limited. From December 1993 to January 1997, he served as the General Manager of Shanghai Gaosheng Real Estate Development Co., Ltd., a consulting service provider in financial and real estate investment. Mr. Chou received his Bachelor’s degree in Business from Tunghai University and an EMBA degree from Hong Kong University of Science and Technology.