Banks circle rare Myanmar buyout

SINGAPORE, June 19 (LPC) – The battle for control of Irrawaddy Green Towers could lead to a rare acquisition financing in Myanmar and the country’s largest-ever syndicated loan.

International banks are discussing a US$300m-$400m loan with shortlisted bidders that include private equity firm CVC Capital Partners and edotco Group, a unit of Malaysia’s Axiata Group. The preferred bidder is expected to be picked by early July.

A financing of that size would be Myanmar’s largest syndicated loan and only the second leveraged buyout in the country, if a financial sponsor emerges victorious.

The loan will test liquidity for a market that is seldom on the radar for lenders, many of which don’t have country limits for Myanmar.

“Country limits will present a key challenge for the debt financing,” said a Singapore-based senior loans banker. “It might not be easy to put this together.”

The sale of IGT comes in a subdued period for mergers and acquisitions in Asia Pacific as a result of the coronavirus pandemic. That could encourage lenders to add to their exposure given that an IGT financing is likely to pay higher yields than those that are found elsewhere in Asia.

This year, some borrowers from Myanmar have raised club loans totalling US$370m from half a dozen Asian banks, for property sector credits such as Kajima Myanmar Holding and conglomerate Shwe Taung Group.


Should edotco win the bidding for IGT, it would be able to raise a larger amount of debt to support its purchase – as is typically the case with any strategic bidder competing against a financial sponsor.

The subsidiary of Malaysian telecom conglomerate Axiata already owns and operates 3,150 towers across Myanmar, which would also provide comfort to potential lenders.

Apart from its own banking relationships, edotco could also tap into Axiata’s balance sheet and financing arrangements to support its bid for IGT. In May, Axiata obtained a total of US$800m in syndicated multi-currency Islamic financing facilities that could be used for the acquisition, bankers familiar with the transaction said.

Moreover, IGT’s loan presents banks with a chance to gain exposure to a leading player in Myanmar’s fast-growing telecommunications infrastructure sector, according to a second Singapore-based loans banker.

IGT operates over 3,000 telecom towers and has long-term lease agreements with all four telecom operators in the country: Norwegian state-owned Telenor, Qatar’s Ooredoo, state-owned Myanmar Post and Telecommunications and Telecom International Myanmar Co, or MyTel.

Should a financial sponsor win control of IGT, an LBO loan would spice up an Asian loan market that has provided few opportunities for banks to make outsized returns this year.


The only LBO loan from Asia (ex-Japan, ex-Australasia) this year is a US$90m financing for TPG Capital’s buyout of Malaysia-based Paramount Corp’s K-12 education business.

Sole bookrunner Deutsche Bank launched the deal into limited syndication in February, but it is not clear if the deal has closed given the turn in market conditions following the Covid-19 outbreak.

There is a precedent for a Myanmar LBO loan. In January last year, PE firm TPG Capital closed a US$247.4m financing for its LBO of telecommunications infrastructure firm Pan Asia Majestic Eagle.

TPG’s LBO of Pamel complemented its existing Myanmar telecom tower firm Apollo Towers, with the combined business expected at the time to have more than 3,000 telecom towers in the country and an enterprise value of at least US$700m.

DBS Bank, ING Bank and OCBC were the mandated lead arrangers, bookrunners and equal underwriters, while nine other Asian lenders, including six from Taiwan, joined in general syndication.

That pioneering LBO loan from Myanmar paid top-level all-in pricing of 504bp and 515bp based on margins of 455bp and 475bp over Libor and average lives of 3.4 and 4.1 years respectively for the US$177.44m Bidco and US$69.96m Opco portions.

According to the annual report of minority shareholder Myanmar Investments International, Apollo Towers and Pamel would have combined revenues of approximately US$110m and Ebitda of around US$65.7m for the financial year ending March 2019 on a pro-forma aggregated basis.

IGT’s annualised Ebitda was US$70m over the last quarter and this is expected to be around US$75m at the closing of the proposed acquisition. That means the US$300m–$400m of debt supporting an LBO would represent leverage of around 4.0x–5.7x.

According to the first Singapore-based loans banker, CVC would have to chip in with a significant equity contribution to provide comfort to potential lenders. Typically, LBO loans in Asia carry leverage of less than 5x, and in challenging situations, it can be lower than 4x.

Singapore-incorporated Irrawaddy Towers Asset Holding holds 99.99% of the shares in IGT and is in turn owned by Middle East investment firm Blu Stone Management and Lebanon’s M1 Group.

CVC declined to comment, while IGT did not respond to requests for comment. An edotco spokesperson said the company is always looking at potential opportunities within footprint countries.

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