Etisalat, the UAE’s biggest telecommunications company, said on Wednesday it is raising up to $502m by selling most of its stake in PT XL Axiata, Indonesia’s biggest block offering since December 2010.
Etisalat invested US$440m in Indonesia’s third-biggest phone operator nearly five years ago. The sale has been expected for a long time as the UAE firm failed to expand its partnership with XL Axiata’s major shareholder, Axiata Group of Malaysia.
Equity capital markets in Southeast Asia have seen a boom in share offerings in Malaysia, Thailand and other markets. It also follows a surge of nearly 50% in XL Axiata shares in 2012, compared with an 8.7% rise in Indonesia’s benchmark share index.
“It’s hard for Etisalat to expand its business if they’re not the controlling shareholder like Axiata,” said Jemmy Paul, head of equity fund Sucorinvest Asset Management in Jakarta. “So it’s better to divest the investment at a good price.”
The selldown will be Indonesia’s biggest block deal since the $530m share sale of PT Sarana Menara in December 2010. Etisalat will own a 4.2% stake worth $253m in XL Axiata after the sale. The company has a three month-lockup on the remaining XL Axiata shares, the terms showed.
JPMorgan and Morgan Stanley were hired to manage the share sale.