CVC moves to exit Indonesia's Link Net, buys Malaysia's Affin Hwang

The private equity firm has agreed to sell its 36.99% stake in Link Net to local mobile carrier XL Axiata for IDR 4.89trn (USD 340m), according to a filing. Lippo Group-owned First Media will offload its 29.04% interest at the same time. XL Axiata is investing directly and through an indirect subsidiary. The latter entity will launch a mandatory takeover offer for the remaining shares.

The offer of IDR 4,800 per share – which values the company at IDR 13.2trn – represents a 10.3% premium to Link Net’s January 27 closing price. The stock reached as high as IDR7,200 in the weeks following its June 2014 IPO, but hasn’t traded above IDR 5,500 in four years.

The proposed sale comes just over two years after CVC and Link Net agreed to exit their positions to MNC Vision, a subscription-based television network controlled by Indonesian media conglomerate MNC Media. That deal lapsed in May 2020.

CVC invested USD 275m in Link Net through a bond and share issue in 2011, leveraging ties to Lippo – owned by the Riady family – that had secured a buyout of Matahari Department Store the previous year. It took a 33.94% stake, with the option of increasing it to the 49% foreign ownership ceiling.

This option was exercised when Link Net went public. The company raised IDR 487bn as First Media sold 304.3 million shares at IDR 1,600 apiece, reducing its stake from 66.06% to 56.06%. Four months later, the two shareholders sold a 30% interest for IDR 5.5trn. CVC reduced its holding from 49% to 33.4%. The GP’s percentage ownership has fluctuated due to changes in treasury stocks.

Link Net operates fibre optic and coaxial cable networks that reached 2.68m homes as of December 2020. It had 839,000 broadband internet subscribers, 817,000 home cable subscribers, and 2,340 corporate customers. Revenue came to IDR 4.05trn in 2020, up from IDR 3.75trn the previous year. Over the same period, net profit rose from IDR 888.7bn to IDR 959.4bn.

CVC has agreed to buy 68.45% of Affin Hwang for MYR 1.54bn (USD 368m), facilitating a full exit for Affin Banking Group, a filing stated. The international unit of Japan’s Nikko Asset Management will retain its 27% interest.

Affin Hwang had MYR 81bn in assets under administration – directly and through its Islamic fund management arm – as of December 2021. Its clients include corporates, pension funds, financial institutions, and individual investors. Other interests include a majority stake in private equity firm Bintang Capital Partners.

CVC is investing via its fifth pan-regional fund, which closed on USD 4.5bn in 2020. Affin Hwang represents the firm’s sixth deal in Malaysia since 2007, bringing its total capital invested in the country to more than USD 1bn, according to a statement.

“We remain confident in the strong economic fundamentals of the country, and believe this investment is an important opportunity for us to contribute to the continued development of Malaysia's asset management industry and capital markets, as well as to grow Malaysia into the region's leading asset management hub,” said Alvin Lam, a senior managing director at CVC.

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• Topics
• Southeast Asia
• Trade sale
• Buyouts
• Technology
• Infrastructure
• Financials
• Indonesia
• Malaysia
• Financial Services
• TMT
• CVC Capital Partners