Axiata Group Berhad and its wholly-owned subsidiary, edotco Group Sdn. Bhd. announced the signing of the definitive agreements of its record Equity Private Placement Deal of USD600 million (RM2.67bil) with Innovation Network Corporation of Japan (“INCJ”, USD400 million committed) and Khazanah Nasional Berhad (USD200 million committed) for primary and secondary edotco shares, respectively.
Said to be the largest 2016 placement exercise in the tower sector announced on 13 December 2016, the transaction is expected to close by end January 2017.
Based on edotco’s portfolio at close, the maximum committed placement of USD400 million (equivalent to RM1,778.20 million) from INCJ and USD200 million (equivalent to RM899.10 million) from Khazanah (Mount Bintang Ventures Sdn. Bhd) would result in the new investors collectively owning 34.1% of edotco, with Axiata remaining the majority shareholder at 65.9%.
Innovation Network Corporation of Japan (INCJ) was established in July 2009 as a public-private investment company that provides financial, technological and management support for next-generation businesses. INCJ specifically supports those projects that combine technologies and varied expertise across industries and materialize open innovation.
INCJ is a public-private partnership between the Japanese government and over 20 major corporations including Sharp, Canon, Sony, Toyota, Hitachi, Panansonic, Mitsubishi, Toshiba and others. It has the capacity to invest up to JP ¥ 2 trillion (approximately US$20 billion).
Khazanah Nasional Berhad is the strategic investment fund of the Government of Malaysia. Khazanah is a major shareholder of Axiata holding 37.58% of the issued and paid up share capital of Axiata.
This Private Placement, as concluded by the investors, values edotco’s final portfolio at equity value of close to USD1.5bn (RM6.67bil) and an enterprise value to FY2016 EBITDA multiple of 12.5×3, which is comparable to regional peers. 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. Axiata and edotco said the valuation was arrived based on a competitive process which included several other international and domestic parties.
Suresh Sidhu, CEO of edotco said, “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. We will deploy the proceeds of the primary placement with the aim of accelerating our growth trajectory, thereby growing shareholder value further”.
edotco Chairman, Datuk Azzat Kamaludin stated, “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.”
Tan Sri Jamaludin Ibrahim, President & Group CEO of Axiata added, “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. 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.”
J.P. Morgan is the Sole Placement Agent in this transaction.