LDC London Asia

RNS Number:7048X
London Asia Capital PLC
04 June 2007


4 June 2007


                            London Asia Capital plc

               Investment in China Exchange and Trading Statement


London Asia Capital plc ("London Asia" or "the Group") the UK listed (AIM:
LDC.L) Asia focused merchant banking group, has taken a 40% stake in China
Exchange Limited ("CEL" or "the Company"), a newly formed Singaporean holding
company set up to invest in Chinese financial services businesses.


CEL, headed by Mr Lim, will initially focus on financial services businesses in
Shaanxi Province, China. Mr Lim holds 37% of the Company.


London Asia has acquired its stake via the issue of 30,859,656 new London Asia
ordinary 5p shares, equal to a consideration of #3.10 million at the 10p share
price agreed for the investment, in exchange for newly issued CEL shares.
Application will be made for the 30,859,656 new ordinary shares to be admitted
to trading on AIM, with admission expected on 8 June 2007.


London Asia Ltd ("LAL"), the Hong Kong incorporated financial services business
in which London Asia took a 40% stake last month, has taken a 23% stake in CEL.


Simon Littlewood, London Asia Chief Executive, said: "Shaanxi Province, whose
provincial capital is the world famous Xi'an, home to the terracotta warriors,
is an important gateway to the centre and west of China, where the Chinese
Government is encouraging significant new investment to counterbalance the
existing over-investment in China's coastal region. CEL is already at an
advanced stage of negotiations for the acquisition of three financial services
businesses, about which we hope to provide more information in the near future."


Jack Wigglesworth, London Asia Chairman, said: "This investment is in line with
our strategy of expanding through partnerships, and using the balance sheet and
resources of the new venture to expand more rapidly than would be possible using
solely London Asia's resources.


"This strategy and our restructuring have better aligned the interests of
shareholders and management, creating a renewed energy across the Group, after a
period when many of our initiatives were blocked through various regulatory or
other hurdles.


"London Asia's share price has virtually halved over the last two months,
causing great concern amongst our shareholders, employees and partners. Whilst a
large part of the decline is undoubtedly due to the overhang of stock caused by
the decision of former employees and shareholders to reduce their exposure to
China and London Asia, there appears also to be some concern as to the financial
and strategic position of the Group, in the light of the significant changes of
the last few months.


"As at the end of May, London Asia had over #2 million of cash in the bank, with
current running costs covered by recurring fees and other income. Much of our
recent expansion has been through joint ventures, which means that the cost is
not borne by London Asia, with the joint ventures having their own access to
resources.


"London Asia's 2006 audited results are likely to be released the last week of
June. We are attempting to show the results according to International Financial
Reporting Standards (IFRS), which requires the valuation of investments at fair
value, rather than historic cost as we have previously shown. This will
hopefully give shareholders more useful information with which to arrive at a
valuation of the assets of the business.


"Our senior management team has been strengthened, both through direct hires and
via the additional resources brought in through the new ventures. Victor Ng, now
freed up from the time consuming tasks and responsibilities inherent in a board
position on a UK listed PLC, is better able to focus on building the business in
Greater China, and has been the architect of much of the expansion of the last
three months, with a number of additional new ventures in the pipeline which we
have been working on for some time but are now in a better position to close.


"Recent announcements from our investee companies have demonstrated that our
investee companies, and those of the London Asia Chinese Private Equity Fund,
continue to perform. As the portfolio matures, there are increasing
opportunities to make exits and realize the value, either through listings, such
as the recent announcement of China Eastsea to step up from PLUS to AIM, or
through disposals, such as the sale by the Fund of its entire stake in Devotion.


"There has been some concern that the recent strong performance of the Chinese
stock markets, and the fear that there could be a collapse in them, could have a
significant impact on the Group. London Asia does not currently have any money
invested in companies listed on the Chinese stock markets. Whilst a significant
fall in China's stock market would no doubt have a negative impact on the value
of all China related businesses, the wobble of a couple of months ago, when a
temporary fall in China's stock market caused a mini sell off on stock markets
worldwide, demonstrates that given how integrated China now is to the global
economy, and how much money China keeps lending to the US and UK to pay for
their overspending and mounting debts, any sustained fall in China's markets or
economy is likely to have a severe impact on valuations of businesses across the
board, not just companies like London Asia."



For further information please visit www.londonasia.com or contact:


Simon Littlewood             John West/Andrew Dunn         Jonathan Wright
London Asia Capital plc      Tavistock Communications      Seymour Pierce
Tel: 020 7231 0282 Tel:      020 7920 3150                 Tel: 020 7107 8000



                      This information is provided by RNS
            The company news service from the London Stock Exchange

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