Dawood Hercules to divest Hubco for Rs17bln investment in tower firm

KARACHI: Dawood Hercules Corporation, the country’s leading investment conglomerate, planned to acquire 45 percent stake in a cellular tower firm through proceeds of its divestment in an independent power producer Hub Power Company, a top official said on Tuesday.

Inam-ur-Rehman, chief executive officer of Dawood Hercules said the company planned to acquire as much as 45 percent equity stake in Edotco Pakistan (Private) Limited, a subsidiary of Malaysia-based Asia’s largest tower infrastructure company Edotco Group, against an equity investment and short-term loan of up to Rs17.43 billion.

“The proceeds from the offloading of stake in Hub Power Company would be utilised for this investment,” Rehman added. “Investment in Edotco’s business was the plan, and the timing of offloading Hub Power and investment in Edotco coincided.”

Last year, Dawood Hercules of Dawood Group unveiled a plan to contemplate a potential sale of its entire shareholding in Hubco constituting 14.91 percent of the outstanding paid-up capital to Mega Conglomerate (Private) Limited.

In August 2017, Edotco Group, a subsidiary of Axiata Group, announced its biggest expansion plan to date with the proposed acquisition of approximately 13,000 towers in Pakistan to solidify its position as one of the largest independent tower companies in the world for a total transaction consideration of $940 million. Edotco is acquiring the towers from Pakistan Mobile Communications Limited together with Dawood Hercules.

With its existing portfolio of over 26,000 towers owned and operated across six countries, the move will effectively place Edotco as the eighth largest independent tower company and second largest multi-country tower operator globally.

Dawood Hercules, in a board meeting, adopted a resolution to invest in the form of equity investment and short-term loan in Edotco Pakistan.

Of the cumulative investment, the loan amount would not exceed Rs10.13 billion at a mark-up rate of 10 percent/annum.

Dawood Hercules is continually exploring exceptional business and investment opportunities.

“We firmly believe that our investments should be made in areas that positively impact a large number of people and solve significant problems,” the company said in its financial report.

“The successful sale of our Hub Power investment gives us the opportunity to realign our portfolio towards businesses of the future.”

Dawood Hercules, listed on the Pakistan Stock Exchange, has a market capitalisation of approximately $600 million. The company posted a net profit of Rs926.21 million for the quarter ended September 30, 2017.