Jolla, the Finnish startup formed by ex-Nokians with the hope of rising, phoenix-like, from the ashes of Nokia’s abandoned MeeGo platform — via its Sailfish OS — has secure an outside investment from a company based in Hong Kong. The company, China Fortune, formerly known as Fortune Telecom Holdings, has taken a 6.25 per cent stake in Jolla.
Writing in an investor note on its website, China Fortune notes that a wholly-owned subsidiary acquired convertible bonds from Jolla last December and, late yesterday, agreed to exercise its option to purchase 11,944 shares for just over €1 million ($1.3 million). The share purchase is due to be completed by March 8.
China Fortune describes itself as “principally engaged in distribution and trading of mobile phones and related accessories, development of marketing and after-sales service network and mining and processing of celestite, zinc and lead minerals”. Its website also notes that it is the “sole fulfillment distributorship” for Nokia Professional centers in the mainland China.
China Fortune’s transaction note on the Jolla stake states it had been actively looking for “opportunities” to diversify its business. But goes on to say that investing in Jolla builds on pre-existing mobile-related components of its business:
With a view to diversifying the business of the Group, the Group has been actively looking for opportunities which will further enhance the shareholders’ value. Since the Group has been in the related mobile phone industry for decades, and the potential for mobile phone related business development is surely enormous and sustainable, mobile phone operating system and mobile internet are the major key business areas the Group is interested in. Although Jolla Oy is a newly established company in Finland, its team consists of well-experienced programmers and developers of mobile phone operating system. Jolla Oy’s coming innovative and brand new mobile phone operating system is expected to bring new impact and opportunity to the market.
Discussing the specifics of how the stake was negotiated, the statement adds:
The Total Acquisition Consideration was determined after arm’s length negotiations between the parties taking into consideration the opportunities for the Group to invest in Jolla Oy, to enter the industry of mobile phone operating system development, and the long-term strategic business cooperation potential with Jolla Oy.
At the time of writing neither Jolla or China Fortune had responded to requests for comment. We’ll update this article with any response. Update: In an emailed statement, Antti Saarnio, Jolla’s Chairman of board, said China Fortune’s investment is part of Jolla’s first financing round which the company started last summer and has now concluded. He added that Jolla is in the process of raising a second round of financing, during Spring — in order to be “financially ready” for its product launch.
“We are very happy to get China Fortune’s investment into Jolla. We believe that China Fortune’s long experience from China’s mobile phone market will greatly support Jolla’s entry into China’s smartphone market, the most dynamic and largest smartphone market in the world,” he added.
In addition to China Fortune’s stake, Jolla confirmed both owners have invested in the company, along with a group of unnamed outside investors.
A Hong Kong-based telecoms company taking a stake in Jolla makes plenty of sense given Jolla’s focus on the Chinese mobile market. Last July Jolla signed a distribution deal with the largest mobile phone retailer in China, D.Phone Group. This was followed, in October, by the creation of an alliance, based in Hong Kong, to help establish an ecosystem around Sailfish — an alliance that intends to contribute €200 million to help fuel the ecosystem. Jolla is also establishing R&D operations in Hong Kong and elsewhere in China.
“China is a game changer in the technology industry,” said Jolla’s CEO at the time of the alliance announcement. “The next big mobile change will come from China and Jolla wants to be enabling it. There are massive resources and competence to transport the whole industry.”
The scale of the Chinese mobile market was underlined by stats put out yesterday by mobile analytics firm Flurry — which put China ahead of the U.S. and top globally for active Android and iOS devices, with approaching 250 million active devices projected by the end of the month.