TPG, MBK agree sale of Wharf T&T to Hong Kong’s HKBN

According to a filing, HKBN will pay TPG and MBK HK$1.8 billion each in the form of 153 million shares at HK$11.60 each, representing a 20.6% stake in the company overall. Each seller will also receive HK$970 million in vendor loan notes convertible to shares at the same price and potentially representing up to 167 million additional shares in total. HKBN will also assume Wharf T&T’s indebtedness in the amount of $670 billion, excluding cash and cash equivalents of around HK$260 million.

Wharf T&T was founded in 1995 and acquired from its parent company The Wharf Holdings by MBK and TPG in 2016 for HK$9.5 billion. The company provides telecommunication services such as broadband internet, voice communication, and information technology, to enterprise customers in Hong Kong through a range of technologies including a self-built fiber-optic network that covered more than 5,400 commercial buildings as of June 2018.

For the year ended December 2017 Wharf T&T reported HK$2.1 billion in revenue, up from HK$2 billion the year before. Over the same period the company went from a net profit of HK$339 million to a net loss of HK$263 million.

HKBN provides broadband internet service to both residential and enterprise customers, with about 2,400 commercial buildings covered as of February 2018. The acquisition of Wharf T&T will help HKBN more than double its scale in the enterprise solutions market and expand its network coverage and customer base, while realizing savings in efficiency through synergies between the two businesses.

Prior to its 2015 IPO, which raised HK$5.8 billion, HKBN was backed by CVC Capital Partners, which acquired the company from Hong Kong Television Network in 2012. CVC has since made a full exit from the company, but Canada Pension Plan Investment Board (CPPIB) and Singapore’s GIC Private still hold stakes of 18% and 9%, respectively. Following the issue of shares to TPG and MBK and assuming the full conversion of the vendor loan notes, these holdings are expected to drop to 12% and 6%.

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• Topics
• Greater China
• IPO
• Infrastructure
• Technology
• Hong Kong (China)
• Exit
• TPG Capital
• MBK Partners
• TMT