Axiata Group will use proceeds from the Sukuk issuance for general corporate purposes
PETALING JAYA: Axiata Group Bhd
has signed definitive agreements to hive off some of its stake in its wholly owned subsidiary, edotco Group Sdn Bhd, by selling new and current shares for US$600mil (RM2.67bil).
The deal would see Axiata paring down 34.1% of its stake and selling it to its majority shareholder Khazanah Nasional Bhd and the Innovation Network Corp of Japan (INCJ).
“This private placement, as concluded by the investors, values edotco’s final portfolio at an equity value of close to US$1.5bil (RM6.67bil) and an enterprise value to financial year 2016 (FY16) earnings before interest taxes, depreciation and amortisation multiples of 12.5 times, which is comparable to regional peers,” Axiata said in a press release yesterday.
“The consideration for the edotco shares above was arrived based on a competitive process, which included several other international and domestic parties,” it added.
Edotco is issuing 546.54 million new shares – the first regional and integrated telecommunications infrastructure services company in Asia – to INCJ for a cash consideration of US$400mil (RM1.778bil).
Axiata will also sell 273.27 million secondary edotco shares for US$200mil (RM899.1mil) to Khazanah’s unit, Mount Bintang Ventures Sdn Bhd. Axiata said the transaction is expected to close by the end of this month."
“Based on edotco’s portfolio at close, the maximum committed placement of US$400mil from INCJ and US$200mil from Khazanah would result in the new investors collectively owning 34.1% of edotco, with Axiata remaining the majority shareholder at 65.9%,” the press release said.
Axiata said that the final portfolio takes into account the potential injection of tower assets in Cambodia and Sri Lanka at a later date with a resultant increase in Axiata’s shareholding in edotco. In its Bursa Malaysia announcement, Axiata said that the cost of investment of the shares to be sold is approximately RM273.3mil based on further investments in edotco by itself to be completed by closing and past investments made in 2013 and 2015. “Proceeds from the disposal will be used for general corporate purposes and/or repayment of existing indebtedness and/or incurred by Axiata from time to time,” the group said.
edotco’s chief executive officer (CEO) Suresh Sidhu said he welcomed the placement and new shareholders to the company.
“Our lead investors and new shareholders, INCJ and Khazanah, are both long-term investors who will provide strategic value-add to edotco’s growth strategy, open doors to further strategic collaborations, as well as enhance and diversify our shareholder base,” Sidhu said.
“We will deploy the proceeds of the primary placement with the aim of accelerating our growth trajectory, thereby growing shareholder value further,” he added.
edotco’s chairman Datuk Azzat Kamaludin said that the bright prospects in the company had helped bring about two new strong shareholders.
“edotco’s strong business fundamentals, exceptional long-term prospects and experienced management team have all played a role in attracting high-quality foreign and local investors such as INCJ and Khazanah,” Azzat said in the statement.
Axiata’s president and group CEO Tan Sri Jamaludin Ibrahim noted that valuations for edotco were strong for this placement exercise due to strong business fundamentals.
“Significant portfolio expansion as well as strong improvements in tenancies have led to robust business growth, and as a result, edotco has been able to achieve a comparatively strong valuation in this placement exercise,” Jamaludin said.
“We are determined to make edotco a world-class business and one of the world’s largest independent tower companies by 2020. The successful placement exercise is yet another step - financially and symbolically - towards facilitating this aspiration,” he added
J.P Morgan is the sole placement agent in the transaction.
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