jakiro
Jessy, bitchain vision
On June 27, OSL Group (0863.HK) revealed that it plans to acquire all shares of payment company Banxa with a capital contribution of approximately HK$486.7 million.On June 26, Hong Kong issued the “Hong Kong Digital Asset Development Policy Declaration 2.0”, which proposed four strategic directions with the “LEAP” framework as the core, among which P represents partnership and emphasizes regional and international cooperation.The acquisition of Banxa by OSL is essentially a sign that Banxa holds 45 licenses that can support its business in these parts of the world, and it is also in line with OSL’s plan to vigorously develop PayFi.
According to the 2024 financial report information, OSL Group achieved its first year profit after its establishment.OSL, an exchange under OSL Group, is the first licensed exchange in Hong Kong. The earlier OSL Group was affiliated with Hong Kong’s shell king Gao Zhenshun, and it was more like a shell company relied on hype. The company wanted to sell it in early 2023, and it was successfully sold by BGX’s HK$710 million in 2024, and finally achieved profitability in 2024.
A careful review of OSL Group’s financial report will show that in 2024, OSL Group’s digital asset market business revenue was HK$283 million, a year-on-year increase of 73%. The main revenue comes from over-the-counter trading, inquiry trading (RFQ), exchange business and custody services; the revenue from digital asset technology infrastructure business was HK$92 million, a year-on-year increase of 415%. The main revenue sources include SaaS services.OSL’s turnaround of losses into profits is also a mirror reflecting the current development status of Web3 in Hong Kong. With the orderly advancement of various businesses such as retail investors in Hong Kong, the entire crypto ecosystem of Hong Kong has become increasingly perfect.
For OSL, where are the key nodes for profit?Does the from loss to profit also indicate that Hong Kong’s Web3 development has entered a new stage?
From a “shell” company to being acquired by BGX
According to Tencent’s “Cantonese”, OSL began to look for potential buyers in the market to acquire during the Spring Festival in 2023.
The predecessor of OSL was a company listed on the main board of Hong Kong stocks in 2015 – Brand China. It is a company that mainly engages in advertising and marketing businesses, providing customized advertising and marketing services to customers in the automotive and other industries.
In early 2018, the famous Shell King acquired 74.48% of the issued shares of the brand China through its company East Harvest, becoming the actual controller of the brand China. It was also after that that OSL Exchange was established within the brand China. In 2019, the brand China was renamed BC Technology.
Gao Zhenshun is known as the “shell king”. In the Hong Kong capital market, he is known for his ability to acquire shell resources of listed companies with poor performance at low prices, and then make profits through asset restructuring.He has successfully operated many similar transactions before, such as selling Cultural China (later renamed Alibaba Pictures) to Alibaba, helping the latter to plan the cultural industry field, and he has also gained considerable profits from it.
The acquisition of brand China, subsequently establishing an internal exchange and rename change are actually all aimed at enhancing the company’s value and market influence through business integration and strategic adjustments. When the time is right, capital exit will be achieved through equity transfer or other means to make huge profits.
OSL then obtained a virtual asset license issued by the Hong Kong Securities Regulatory Commission, namely, Class 1 (Securities Trading) and Class 7 (Providing automated trading services) regulated activities licenses on December 15, 2020, becoming the first licensed institution in Hong Kong.
Combined with the 2021 and 2022 financial reports, BC Technology Group sought to sell OSL exchanges in early 2023, due to the sharp drop in revenue from digital asset business from HK$278 million to HK$71 million, weak trading profits and high compliance and technology investment (administrative expenditure increased to HK$574 million). At the same time, the company’s strategy is focused on high-growth SaaS services (revenue increased by 197.3% to HK$30 million). In addition, the sluggish crypto market has caused pressure on the exchange’s valuation. The sale of OSL can recover funds to alleviate the debt-to-asset ratio (73.8%) and optimize resource allocation.
It was not until November 14, 2023 that BGX announced a strategic investment in OSL’s parent company BC Technology Group, subscribed to approximately HK$710 million in new shares. BGX held 29.97%, becoming the largest shareholder of OSL.The nearly year-long journey of search finally came to an end.After that, BC Technology Group, the parent company of the OSL Exchange, was also renamed OSL Group.
The key node from loss to profit-BGX is invested in HK$710 million
After receiving the investment from BGX, OSL’s development has indeed ushered in huge changes.
BGX completed a strategic investment of HK$710 million in January 2024, and since then, the company’s performance and business structure have improved significantly.According to the financial report, the total revenue in 2024 increased by 78.6% year-on-year to HK$375 million, turning from net loss to profit of HK$47 million, and the operating cash flow changed from net outflow of HK$686 million to net inflow of HK$379 million, and the debt-to-asset ratio dropped from 72.6% to 31.1%. It is also thanks to capital injection that the company’s cash reserves increased to HK$635 million.
After BGX’s capital injection, many talents with rich experience in the cryptocurrency and Internet finance industries have been introduced one after another. Gao Zhenshun also officially stepped down as executive director in August 2024.
The major change of senior management has injected vitality into OSL, and the realization of turning losses into profits is closely related to the huge transformation of the company’s strategy. It focuses on core businesses and divested non-core assets, such as selling Shanghai Jingwei, and completely withdrawing from the business park management business.Accelerate the focus on digital asset trading and SaaS services, with the former reaching HK$263 million (+81.6%) and the latter reaching HK$92 million (+415%).The pace of globalization has also accelerated in 2024, with the help of capital injection, acquiring Japanese licensed platform OSL Japan and obtaining an Australian license.At the same time, we will expand institutional customers and retail markets through BGX resources, and promote the transformation of business to technology output and global licensed transactions.
Another thing worth noting is that on April 15, 2024, OSL cooperated with Huaxia Fund (Hong Kong) and Jiashishi International to launch digital asset spot ETFs.In this cooperation, OSL Digital Securities Co., Ltd. serves as the virtual asset trading and sub-custody partner of Huaxia Fund (Hong Kong) and Jiashen International. OSL provides blockchain infrastructure to support investors to directly participate in investment with virtual assets and play a key role in the transaction and custody links.
By 2025, OSL will continue to expand globally and vigorously develop PayFi.The acquisition of Banxa is a proof of this. Banxa focuses on the research and development of payment technology and has accumulated technology such as payment gateways and API interfaces. Its B2B payment solutions can complement OSL’s crypto trading platform, helping OSL enhance its one-stop service capabilities.This has also accelerated OSL’s global layout. OSL has previously acquired Japan’s CoinBest and European digital asset platform, and this acquisition of Banxa fills the gap in the North American market.Banxa operates in Europe, North America, Australia and other places, with a wide market coverage.Through the acquisition, OSL has formed a triangle layout in Asia-Pacific, Europe and North America.Banxa holds 45 international licenses, which covers key markets such as Canada and Lithuania.
From relying on transaction fees in the early stages to the 2024 financial report, 81.6% of its revenue comes from digital asset transactions (mainly institutional services), and 415% of its growth in SaaS revenue comes from technology output.This transformation from a “trading platform” to a “infrastructure service provider” also corresponds to the characteristics of B-side services leading under the Hong Kong regulatory framework.
Hong Kong has opened a new stage of Web3, but the OSL road is difficult to replicate
From being deeply trapped in the quagmire of losses and seeking sales to turning losses into profits within just one year after BGX’s capital injection, OSL has shown strong growth momentum and a clear expansion blueprint. Its transformation path is by no means accidental and difficult to replicate.
Its transformation path deeply reflects the key turning point in Hong Kong’s Web3 ecosystem from policy preparation and compliance exploration to substantial implementation and initial prosperity.OSL’s digital asset trading revenue soared by 81.6% in 2024 and SaaS service revenue soared by 415%, which is a direct reflection of the gradual release of policy dividends.
OSL’s early “shell companies” were highly colored, and its value was largely dependent on the license of “Hong Kong’s first licensed exchange”.The performance explosion after BGX took over proves that its value has shifted from a “license holder” to an “effective operator of license value and a builder of business capabilities.”Profits come from real transaction volume growth, SaaS service revenue and technology output, and the crypto industry has begun to move from a simple “compliance concept” to actual “business implementation” and “revenue creation”.
Looking at OSL’s past few years, especially its inclination in institutional business, it can be seen that OSL’s development strategy is no longer limited to building an exchange.Its business map clearly outlines the comprehensive Web3 infrastructure service provider of “transaction + custody + technical solutions (SaaS) + payment (Banxa) + global compliance network”.This reflects the maturity of Hong Kong’s Web3 ecosystem, and participants are beginning to build more complex and synergistic business matrices to meet the increasingly diverse needs of institutions and high-net-worth customers.
OSL may confirm that Hong Kong’s policy advantages may enable more institutions to participate in the competition in the global Web3 market through a series of acquisitions and global expansion.From loss to profit, OSL also interprets that under the guidance of a clear regulatory framework, through strategic capital empowerment, focusing on core businesses, divesting redundant burdens, and actively carrying out global compliance expansion and ecological cooperation, Hong Kong’s licensed Web3 institutions are fully capable of achieving sustainable profit growth.
Hong Kong’s Web3 development has entered a new stage characterized by actual business implementation, institutional fund-driven, and global resource integration.In this stage, competition will be more intense. OSL’s phased profit starts with a capital investment of HK$710 million, and the major transformation of senior management is the tentacle of development.The cost is high, it is a game of big capital.
In Hong Kong, nearly 50 institutions can now license to provide virtual asset trading services, but not all of them are as rich as BGX. OSL takes the lead and serves a large number of institutional customers. It is no longer easy for latecomers to share the cake in this market.
