Axiata’s Indonesian Subsidiary Would Sell A 5% Interest In Xl Axiata To Ferrymount For RM423.5 Million

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Axiata Group Bhd’s indirect wholly-owned subsidiary Axiata Investments (Indonesia) Sdn Bhd (AIISB) has agreed to sell a 5% stake in its Indonesia-listed subsidiary PT XL Axiata Tbk to Ferrymount Investments Ltd (FIL) for 1.44 trillion rupiah (RM423.5 million) or 2,700 rupiah (79 sen) per share.

“The disposal enables the timely entry of Indonesia-focused investors into XL who see the potential and possibilities in the domestic telecoms sector,” Axiata said in a stock exchange filing on Monday.

According to Axiata, AIISB signed into a sale and purchase agreement (SPA) on Monday with FIL, Procap Partners Ltd (Procap), and Tiga Investments Pte Ltd to dispose of 533.41 million shares, representing a 5% ownership holding in XL. XL is now owned by AIISB at a stake of 66.5 percent.

Procap and Tiga Investments, in their capacity as guarantors, shall absolutely and irreversibly guarantee the buyer’s compliance with the SPA’s provisions.

The 2,700 rupiah (79 sen) disposal consideration reflects a 5% reduction to the one-month volume weighted average market price (VWAP) of XL shares up to and including September 23, which was 2,847 rupiah (84 sen).

FIL gave AIISB the option to acquire 533.41 million XL shares from FIL at a price of 2,700 rupiah per XL share in connection with the disposal (call option).

AIISB may exercise the call option if the three-month VWAP of XL shares on March 31, 2022 or June 30, 2022 is less than 2,300 rupiah per XL share.

The call option will expire if the three-month VWAP of XL shares reaches 3,300 rupiah at any point during the period January 1, 2022 through June 30, 2022.

Axiata said that the principals of Procap and Tiga Investments have substantial expertise, experience, business ties, and investments in Indonesia and the global capital markets.

“Axiata believes that the disposition, which gives XL access to the aforementioned commercial relationships with Procap and Tiga Investments, among others, would put XL on a more stable operating footing in the near future.

“At the same time, Procap’s and Tiga Investment’s connections to the Indonesian digital ecosystem will enable XL to participate actively and further expand its digital and value-added services for its approximately 58 million consumers, therefore boosting user experience,” the company stated.

Procap is a British Virgin Islands-incorporated company that invests in a variety of technology-focused companies in Indonesia and Southeast Asia, including Provident Growth Fund (a private equity growth fund focused on technology investments in Southeast Asia) and GoTo Group, a “super app” formed by the merger of two prominent Indonesian groups, namely Gojek (Indonesia) and GoTo (Indonesia).

Meanwhile, Tiga Investments is a Singapore-incorporated business founded by George Raymond Zage III in November 2017 under Singaporean law. Zage has been an active consultant and investor in Indonesia for over 25 years and founded Tiga Investments following his departure from Farallon Capital Asia Pte Ltd as CEO.

At the midday break, Axiata shares were down ten cents, or 2.44 percent, to RM3.99, valuing the firm at RM37.52 billion. XL Axiata’s share price was up 20 rupiah, or 0.68 percent, to 2,970 rupiah, giving it a market capitalization of 31.85 trillion rupiah.

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