Minter Ellison advised Keycorp Ltd. on its acquisition of 30 per cent of a new joint venture company in China, the Australian company’s first foray into the Chinese market.
Keycorp provides secure electronic transactions, including smartcards and point-of-sale transaction systems to network carriage and payment engines.
Once approved by Chinese authorities, the joint venture company, POSTech CO. Ltd (Shenzhen), will develop and manufacture EFTPOS products using technology licensed from Keycorp.
Minters said it negotiated the deal and prepared the joint venture documentation and the licensing arrangements. Around seven lawyers from the firm’s offices in China worked on the deal for about six months.
Lead partner, Anthony Lloyd, head of Minters’ Asia technology and communications group, said the parties involved worked well together. “Transactions in China are always difficult, [but] this one went really well”.
He said this was evidence that Australian business was working well in China. “It is a very good transaction because it shows the level of cooperation [between] China and Australia, [which] we will see more of in the future.”
Minters also had to advise on the complex rules governing the level of foreign investment in China, which vary between industries and within industries.
Keycorp said the joint venture will manufacture its K23 payment terminals and K78 mobile wireless terminals. However the company will later develop new software products using Keycorp’s Rapid Application Development Environment and new hardware products working closely with Keycorp’s R&D team.
According to Keycorp, the Chinese government has set a target for the 2008 Olympics of 4.5 million units, up from the present installed base of around 300,000 across the country.
The majority shareholder in the venture is Hunan Computer Co. Ltd, which will sell the products in China. Keycorp will have the option to sell them outside China.