Macquarie looking to spend billions on Edotco

The asset manager's offer could well be just the start of another chapter in Edotco's ongoing ownership saga; talk of a takeover at the infrastructure company has waxed and waned for some time and Macquarie may well not be the only interested party.

This latest rumour comes from Bloomberg, its sources – who apparently have knowledge of the matter – claiming that Axiata is evaluating Macquarie's bid. We have no more information about the context of that bid, other than the aforementioned ballpark enterprise value.

What we do know is that Axiata owns 63% of Edotco, according to its latest annual report. That means it could be looking at a pay day of north of $2 billion should it agree terms with Macquarie.

That is by no means a given though. The newswire noted that considerations are still ongoing and – as usual – may not lead to a deal. Further, it indicated that Edotco may yet draw bids from other parties.

Edotco is an infrastructure specialist with a portfolio of around 55,000 towers at last count – it sold out of Myanmar earlier this year – in some high-growth markets across Asia. It should not be short of suitors.

Axiata Group and its fellow shareholders – Innovation Network Corp of Japan (INCJ) being the largest with a 21% stake in Edotco – explored the possibility of selling the towers company last year, but failed to reach a deal due to disagreements on valuation, Bloomberg reported in October. Its sources told it then that INCJ was looking to revive that sale process, but again, there wasn't a lot to go on and no more information followed, until this latest Macquarie report.

The newswire pointed out that INCJ needs to unload its Edotco holding by the end of March next year, which is when its mandate to operate ends. The Japanese investor ploughed $400 million in Edotco around seven years ago, it said.

That added timeline pressure could mean that we get something concrete out of Axiata on Macquarie's bid, or indeed any others, sooner rather than later. INCJ may well be more willing to compromise on valuation this time around...if it is the one causing the bottleneck, that is.

Bloomberg said INCJ had contacted a number of prospective investors, including private equity firms and family offices to gauge their interest in its Edotco holding, so clearly it is taking the bull by the horns.

To potentially complicate matters though, there is also talk of an IPO. Edotco started looking at a possible listing as long ago as 2018, and is now revisiting those plans. It could look to float in Kuala Lumpur in 2026, which is not long away from when all the preliminary work is taken into account.

A private sale and an IPO are not mutually exclusive, of course. But there will be extensive T&Cs to hammer out. It would be helpful for all concerned if the parent companies could hash out a plan and stick to it.