The deal comprises a cash consideration of $457,725 and MSH shares equivalent to $152,580, according to an announcement.
The proposed transaction is expected to complete by 31 October 2020, after which MSH will hold 2.4 per cent of the issued share capital of MIL, and Civetta Capital will in turn become a strategic shareholder in MSH.
“Civetta Capital has been committed to Myanmar since 2017 through its investment in MIL. The proposed transaction will enable Civetta Capital to generate immediate liquidity for a substantial portion of its initial investment while maintaining exposure to the Myanmar and Vietnam markets through the MSH operating portfolio,” said Alex Klein Tank, founder of Civetta Capital.
MSH will make an application for the consideration shares to be listed on the standard segment of the Official List and to trading on the main market for listed securities of the London Stock Exchange, MSH said.
“As demonstrated by MSH’s prior approach to MIL, MSH’s management believes that MSH’s and MIL’s portfolios and shareholder bases are complementary. MSH would, therefore, consider further growing its ownership in MIL over time and offer liquidity through its shares to MIL’s investors,” said Enrico Cesenni, CEO of MSH.
In 2019 Cesenni told DealStreetAsia that MSH remained interested in buying MIL’s assets even as the latter had earlier turned down a takeover offer from MSH.
MIL then said the proposal was “highly conditional” and significantly undervalued the company.
The takeover bid valued each MIL share at $0.75, which was higher than the $0.68 price in MSH’s Thursday announcement.
Since September 2019, MIL has started a process of making divestments from Myanmar as it decided to wind up the business.
In December 2019, MIL sold its shares in Medicare International Health and Beauty for $1 million after having invested a total of about $2.15 million in the company for a 48.8 per cent stake.
Currently, MIL still has an indirect shareholding of 4.1 per cent in AP Towers Holdings and 37.5 per cent shares in Myanmar Finance International Limited (MFIL).
It reached an agreement in April to sell Myanmar Finance International Limited to Thai consumer finance firm Thitikorn. MIL then warned that regulatory approval would normally take between two and six months to obtain, excluding any delay caused by COVID-19.
In its financial statement as of 31 March 2020, MIL said its holding in MFIL was valued at $4.4 million, compared to the investment cost of $2.7 million. “This equates to an IRR since the initial investment in September 2014 of 11.9 per cent,” MIL said.
The firm’s largest investment in Myanmar is $21 million in telecom tower firm AP Towers, a result of the merger between Apollo Towers and Pan Asia Towers.
The value of this investment was $25.7 million by the end of March, representing a profit of $4.9 million over the cost of the investment and an IRR of 4.6 per cent.
MIL’s net asset value as at 31 March 2020 was $33.2 million, or $0.87 per share. For the six months ending on 31 March 2020, its unaudited consolidated profit after tax was $0.86 million, compared to a loss of $1.05 million in the same period last year.
The firm has closed its office in Yangon and laid off local staff.