SGX-listed Yoma Strategic Holdings (YSH) has agreed to acquire an additional 10 per cent stake in Digital Money Myanmar (Wave Money) from Yangon-listed First Myanmar Investment (FMI) for $6 million.
The transaction will comprise 100,000 ordinary shares and 3.5 million redeemable preference shares, YSH said in a statement. The consideration of $6 million was based on a total equity value of Wave Money at $59.92 million. The transaction value will not exceed $10 million in case a third-party investor acquires an interest in Wave Money at a higher valuation within 12 months, it added.
Wave Money, licensed under Myanmar’s Mobile Financial Services Regulations, is 51 per cent owned by Telenor. YSH had increased its stake to 34 per cent last year after buying shares from FMI for a $19.4 million. Yoma Bank holds another 5 per cent.
“The proposed acquisition will strengthen the company’s financial services pillar since Wave Money has a proven track record of being profitable and is fast growing,” YSH said.
According to the company, Wave Money is the largest mobile payment services provider in Myanmar. Wave Money’s CEO, Brad Jones, told the Nikkei Asia Review recently that transactions via its platform exceeded 2 trillion kyat ($1.3 billion) for the first time in 2018, and would likely reach up to $5 billion by the end of 2019.
The acquisition will be funded by proceeds generated from the disposal of certain non-core assets, YSH added.
The company also disclosed it will sell a 12.5 per cent stake in telecom towers company edotco Singapore to Sojitz Corp for $57.5 million, compared to a book value of the shares at $54.49 million by 30 June 2019.
The announced transactions are “in line with its long-term strategy of growing its core businesses, while actively working to dispose of certain non-core assets to strengthen its balance sheet,” the Myanmar-focused investment firm said.
It expects to monetise $44.14 million of accumulated fair value gains and recognise a further $3.01 million of disposal gains upon completion.
There is growing interest in the financial services sector of the fledgeling economy of the frontier nation. International Finance Corporation has made investments in Keb Hana Microfinance and Yoma Bank, while Myanmar Apex Bank in October said it has allocated 57 billion kyats ($37.5 million) to support microfinance companies lending to small businesses.