Unless otherwise stated, the exchange rate of Indonesian Rupiah (“IDR”) 3401 : RM1.00, being the middle rates prevailing at 12.00 p.m. on 23 September 2021 as published by Bank Negara Malaysia (“BNM”), has been applied in this Announcement for illustration purposes.
1. INTRODUCTION
The Board of Directors of Axiata wishes to announce that Axiata Investments (Indonesia) Sdn Bhd (“AIISB” or “Seller”), an indirect wholly-owned subsidiary of our Company, has on 27 September 2021 entered into a sale and purchase agreement (“SPA”) with Ferrymount Investments Limited (“FIL” or “Buyer”), Procap Partners Ltd (“Procap”) and Tiga Investments Pte Ltd (“Tiga Investments”) for the disposal by AIISB of 533,409,349 ordinary shares in XL (“XL Shares”) representing approximately 5% equity interest in XL to FIL at a disposal consideration of IDR 1,440,205 million (equivalent to approximately RM423.5 million) or IDR2,700 (equivalent to RM0.79) per XL Share (“Disposal Consideration”).
As at the date of this announcement and prior to the Disposal, AIISB holds 66.5% equity interest in XL, which is listed on the Indonesia Stock Exchange.
Procap and Tiga Investments, acting as guarantors will unconditionally and irrevocably guarantee the discharge by the Buyer of its obligations under the SPA.
2. DETAILS OF THE DISPOSAL
Pursuant to the Disposal, our Company has agreed to dispose 533,409,349 XL Shares to FIL at the Disposal Consideration.
The Disposal Consideration was arrived at on a willing-buyer willing-seller basis after taking into account the prevailing market price of XL Shares. The Disposal Consideration of IDR2,700 (equivalent to RM0.79) represents a discount of approximately 5% to the one-month volume weighted average market price (“VWAP”) of XL Shares up to and including 23 September 2021 of IDR2,847 (equivalent to approximately RM 0.84).
The completion of the SPA will take place 1 month from the date of the SPA or such other date as agreed in writing by the parties.
In conjunction with the Disposal, FIL has granted AIISB the option to purchase the 533,409,349 XL Shares from FIL at IDR2,700 per XL Share (“Call Option”). The Call Option is exercisable by AIISB in the event the three month VWAP of XL Share is less than IDR2,300 per XL Share on either 31 March 2022 or 30 June 2022. The Call Option shall be extinguished if the three month VWAP of XL Share exceeds IDR3,300 at any time during the period from January 1, 2022 to June 30, 2022.
2.1 Rationale of the Disposal
As an introduction, Procap is a company incorporated under the laws of the British Virgin Islands, with investments in various technology-focused companies based in Indonesia and Southeast Asia, including Provident Growth Fund (a private equity growth fund focused on technology investments in Southeast Asia) and the GoTo Group, a “Super App” created from the merger of two prominent Indonesian groups, namely Gojek (Indonesia’s largest on-line ride-hailing, food delivery and digital payments platform) and Tokopedia (Indonesian’s leading e-commerce platform). Procap’s founders also have various other significant investments in Indonesia including Tower Bersama (a telecommunications tower company) and Merdeka Copper Gold (a world-class Indonesian mining company). The three founding and current shareholders of Procap are Mr Winato Kartono, Mr Gavin Arnold Caudle and Mr Hardi Wijaya Liong
Tiga Investments is a company incorporated in November 2017 under the laws of Singapore by Mr George Raymond Zage III. Mr Zage has been an active advisor and investor in Indonesia for over 25 years and formed Tiga Investments after leaving his role as CEO of Farallon Capital Asia Pte Ltd. In his time at Farallon, Mr Zage led many high profile investments including Bank Central Asia, Semen Gresik, Protelindo and Gojek where he served on the Board of Commissioners. Tiga Investments has a focus on making long term and active investments in public and private companies and has been an active investor in the technology sector and in Indonesia. In addition, Tiga Investments has been a participant in the market of Special Purpose Acquisition Companies and currently the sponsor of Tiga Acquisition Corp which is listed on the New York Stock Exchange.
Axiata’s investment in XL commenced when TM International (L) Ltd (“TMI”), a wholly owned investment arm of Telekom Malaysia Berhad (“TM”), acquired a 23.1% stake in PT Excelcomindo Pratama (EXCL) on 13 January 2005. Subsequent to the listing of EXCL in September 2005 and through several corporate exercises that ensued, TMI increased its stake in EXCL to 86.5% in December 2009. Following the completion of the restructuring of TM’s mobile businesses, TMI was demerged from TM in 2008 to grow the mobile businesses as a separate entity. In 2009, TMI changed its name to its present form of Axiata Group Berhad and EXCL adopted its new identity, PT XL Axiata Tbk. In April 2010, Axiata placed out 19.8% of its shares in XL thereby reducing its stake to 66.7%. Following the issuance of new shares to the employees of XL pursuant to a share incentive scheme, Axiata’s shareholding in XL has been reduced to the current level of 66.5%.
The Disposal facilitates the timely introduction of Indonesia-focused investors in XL who acknowledge the value and opportunities in the domestic telecommunications sector. The principals of Procap and Tiga Investments have extensive knowledge, experience, business partnerships, and investments in Indonesia, as well as in global capital markets. Axiata is of the view that the Disposal which provides XL with access to the aforesaid business partnerships of Procap and Tiga Investments amongst others, will place XL in a better operational footing in the near future. At the same time, Procap’s and Tiga Investment’s linkages to the Indonesian digital ecosystem will enable XL to actively engage and further develop its digital and value-added services to offer its current base of about 58 million customers, thereby improving the user experience.
2.2 Information on FIL
FIL is a company incorporated under the laws of the British Virgin Islands. Procap and Mr Zage indirectly hold 2/3 and 1/3 of the issued and outstanding share capital of FIL respectively.
2.3 Financial Effects of the Disposal
The Disposal will not have any effect on the issued share capital and substantial shareholders of Axiata.
The Disposal will not have any material effect on the net assets (“NA”) per share, gearing or earnings per share of Axiata.
3. APPROVALS REQUIRED
The highest percentage ratio applicable to the Disposal pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is less than 5%, computed based on the Disposal Consideration compared to the audited consolidated NA attributable to the owners of the Company as at 31 December 2020.
The Disposal does not require the approval of the shareholders of Axiata or any regulatory authorities.
4. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED
None of the Directors and/or major shareholders of Axiata as well as persons connected to them have any interest, direct or indirect, in the Disposal.
5. ESTIMATED TIMEFRAME FOR COMPLETION
The Disposal is expected to be completed in October 2021 or such other date as agreed by the parties.
This announcement is dated 27 September 2021.
