(Yicai) Nov. 15 -- Ping An Insurance Group’s financial technology unit Lufax Holding will buy the Hong Kong virtual bank of OneConnect Financial Technology, another fintech unit of the Chinese insurance giant, to further develop its business in the special administrative region.

Lufax will purchase a 100 percent stake in Ping An OneConnect Bank Hong Kong for HKD933 million (USD119.6 million), the Shanghai-based buyer announced yesterday. The transaction price is lower than the HKD1.5 billion (USD192.2 million) OneConnect invested in the lender.

PAOB was Hong Kong’s first virtual bank focusing on providing services to small- and medium-sized companies. In the first half of the year, it reported revenue of CNY66 million (USD9.1 million), up 45 percent from a year earlier, Lufax noted, adding that the banks’ outstanding loans totaled HKD1.8 billion as of June 30, with a capital adequacy ratio of 100 percent. Last year, PAOB logged a net loss of HKD157 million, widening 27 percent from the previous year.

PAOB targets similar clients and businesses as Lufax, so Lufax can develop the lender’s business using its own operational experience and technology expertise, said Cho Yong Suk, chairman and chief executive officer of Lufax.

Selling PAOB is in line with OneConnect’s overall strategy and shareholders’ interests, said Shen Chongfeng, chairman and CEO of the Shenzhen-based fintech company. OneConnect will continue to focus on improving technology-driven products and services and use the money from the sale as general working capital, Shen added.

Lufax’s net profit shrank 90 percent to CNY131 million (USD18 million), and revenue fell 39 percent to CNY8.1 billion (USD1.1 billion) in the third quarter of the year from a year earlier, the firm announced on Nov. 13. New loans plunged 59 percent to CNY50.5 billion (USD6.7 billion) in the period.

Shares of Lufax [HKG: 6623] plunged 12.4 percent to HKD14.02 (USD1.80) as of 11.50 a.m. in Hong Kong today. Its New York-traded shares [NYSE: LU] closed down 19.2 percent at 82 US cents yesterday.

On Nov. 13, OneConnect reported a net loss of CNY90.9 million in the three months ended Sept. 30, shrinking 31 percent from a year earlier. Revenue fell 21 percent to CNY843.6 million. The company has lost nearly CNY7.3 billion since September 2017.

OneConnect [HKG: 6638] was trading up 2.6 percent at 80 Hong Kong cents (10 US cents) as of 11.50 a.m. in Hong Kong today. Its shares in New York [NYSE: OCFT] closed up 4 percent at USD3.15 yesterday.

Editor: Futura Costaglione