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$28bn Malaysian pension invests $100m in telco towers

KWAP, which sees the sector as a private equity play, has a 10% allocation to alternatives.

Kumpulan Wang Persarraan, Malaysia’s second-largest pension, has invested $100 million as a new investor in edotco, the telecom tower unit of domestic mobile operator Axiata Group.

The transaction is an extension of edotco’s maiden equity private placement, announced in late December last year. It was concluded on the same equity valuation of close to $1.5 billion, giving the company an enterprise value of 12.5x its 2016 EBITDA.

In the private placement’s final instalment, $400 million was allocated to state-backed private equity firm Innovation Network Corporation of Japan, $100 million to KWAP in primary shares, and $200 million to Malaysian sovereign wealth fund Khazanah Nasional in secondary shares, Axiata said. 

Axiata remains the majority shareholder with a 62.4 percent stake, while the three new investors hold a combined 37.6 percent stake in edotco. The unit bills itself as the 12th-largest tower company in the world, with presence in Malaysia, Cambodia, Myanmar, Bangladesh, Sri Lanka and Pakistan. 

The placement’s proceeds will be used to “undertake value-accretive opportunities as they arise”, said Axiata.
“We have been very impressed by edotco’s rapid growth in the past five years, and would like to be part of its growth journey towards becoming one of the leading tower players globally by 2020,” said Dato’ Wan Kamaruzaman bin Wan Ahmad, KWAP’s chief executive. 

“Domestic private equity has been an area of growth and on a trajectory to provide attractive investment income to the fund in recent years, and we would like to continue building our portfolio in this area. The target is to allocate 3 percent of our assets [to] private equity by 2020,” he added. 

KWAP’s unaudited assets under management stood at 124.78 billion ringgits ($28.3 billion; €26.4 billion) at the end of 2016. The fund has recorded an average annual growth of 11.2 percent since its 2007 creation, it said, thanks to contributions from the federal government and statutory bodies as well as accumulation of investment income over the years. 

The pension has a 10 percent allocation to alternatives, which includes private equity, real estate and infrastructure. It invests in private equity via funds, co-investments and direct deals.