Reuters
Mergers News
UPDATE 1-CVC in exclusive talks to buy control of Philippine PLDT unit -source
Wed, Jan 09 23:53 PM EST

* CVC has made at least two investments in the Philippines

* SPi Global has EBITDA of about $45 million -sources

* Rapid economic growth in SE Asia attracting buyout funds

By Maggie Chen and Stephen Aldred

HONG KONG, Jan 10 (Reuters) - Private equity firm CVC is in exclusive talks to buy a majority stake in SPi Global Holdings, a business outsourcing unit of Philippine Long Distance Telephone Co, for about $320 million including debt, a source familiar with the matter told Reuters.

PLDT, Manila's second-most valuable listed company, had put an 80 percent stake in SPi Global on the block last year as it looks to shed non-core businesses. The auction attracted interest from global buyout firms including Bain Capital and Carlyle Group as well as CVC, Thomson Reuters publication Basis Point reported on Wednesday.

The deal underlines rising interest in the Philippines as an investment destination, with some of the world's biggest private equity firms beefing up their capabilities in Southeast Asia's booming economies.

The Philippines' economy grew an annualised 7.1 percent in the third quarter, the second-fastest pace in Asia after China. The rapid pace makes it likely that growth for all of 2012 will surpass the Philippine government's 5 to 6 percent target. The benchmark Philippine stock index surged by a third last year and was one of Asia's best performing markets.

Asia is enjoying a fundraising boom as global equity firms are tempted by its fast-growing economies and potential for further expansion, and that is drawing some of the world's biggest private equity firms to bid on auctions in markets where buyout deals have previously been thin on the ground.

PLDT said in a Philippine Stock Exchange filing last month that it was finalising a deal without identifying the buyer.

PLDT, CVC and Carlyle declined comment, while Bain did not offer an immediate comment.

SPi Global derives most of its revenues in U.S. dollars from outsourcing work for international clients, but also has an education-linked publishing unit which it acquired in 2012.

The company has more than 18,000 employees and operations in the United States, Europe, the Philippines, India, Vietnam and Australia. SPi has earnings before interest, tax, depreciation and amortisation of around $45 million, two separate sources with knowledge of the matter said.

London-based CVC has a strong track record of landing deals in Southeast Asia. In 2011, it bought 15 percent of the Philippines' Rizal Commercial Banking Corp for $115 million and in 2000, it acquired industrial packaging maker Steniel Manufacturing Corp.

In another Southeast Asian deal, CVC is closing in on a $1.7 billion buyout of the KFC fast food franchises in Malaysia, together with the investment arm of Malaysia's Johor State, Johor Corp, and the Employee Provident Fund.

Telecoms provider PLDT, which offers fixed line, wireless and communication technology services, is one of Hong Kong-listed First Pacific Co Ltd's principal investments.


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