Malaysia: KWAP picks $100m stake in Axiata’s telco infra unit

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Malaysia’s pension fund Kumpulan Wang Persaraan (KWAP) has acquired a $100 million stake in edotco, a wholly-owned subsidiary of mobile network operator Axiata Group Bhd.

The investment is an add-on to the $600 million that is being raised by edotco via a private equity placement from sovereign wealth fund Khazanah Nasional Bhd and Innovation Network Corp of Japan (INCJ), as per a December 2016 announcement.

As the second largest pension fund in Malaysia with up to $28 billion in assets, KWAP is one of the government’s key investment arm that seeks to generate optimum returns from its investments.

edotoco is Axiata’s telecommunications infrastructure services unit that operates and manages a regional portfolio of over 25,000 towers across core markets of Malaysia, Myanmar, Bangladesh, Cambodia, Sri Lanka and Pakistan.

The full proceeds from the placement process will allow edotco to undertake value accretive opportunities as they arise.

Final allocation of the private placement exercise stands at $400 million to Innovation Network Corp of Japan, $100 million to KWAP in primary shares, and $200 million to Khazanah Nasional Berhad in secondary shares.

At completion, edotco’s shareholding results in the investors collectively owning 37.6 per cent of edotco, with Axiata remaining as the majority shareholder at 62.4 per cent.

KWAP’s investment was concluded on the same equity valuation of close to $1.5 billion announced in late December 2016, and an enterprise value to FY2016 EBITDA multiple of 12.5 times, which is comparable to regional peers.

Since KWAP’s incorporation in 2007, the fund recorded an yearly average growth of 11.2 per cent. Its growth was attributed to the contributions by the federal government, statutory bodies, and accumulation of investment income over the years. KWAP ended 2016 with unaudited fund at RM124.78 billion.

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