DigitalBridge, through its private equity fund Digital Colony Partners II, and particularly, portfolio company EdgePoint Infrastructure (EP ID Holdings Pte Limited) today announced that it will conduct a mandatory tender offer to purchase the 2.57 billion shares owned by public shareholders in Centratama, an Indonesian publicly-traded tower company. Specifically, these 2.57 billion shares represent an 8.25% ownership interest in Centratama. Additionally, EdgePoint agreed to acquire the remaining 14.9% stake held in Centratama by Northstar Group, delivering the company 100% ownership.

Background to Tender Offer – EdgePoint Infrastructure, Centratama

Today’s announcement closely follows EdgePoint Infrastructure’s $140.7m USD purchase, to increase its stake in Centratama to 76.8%. Indeed, EdgePoint Infrastructure became Centratama’s largest shareholder following this prior purchase from Northstar Group, a Singapore-headquartered private equity firm.

Assuming EdgePoint Infrastructure acquires the entire 8.25% stake in Centratama from public shareholders, the company’s shareholding will rise to 85.1%. Subsequently, EdgePoint has an agreement in-place with Northstar Group, via the entity Clover Universal Enterprise Limited, to purchase the remaining 14.9% of Centratama. In aggregate, EdgePoint is valuing the combined 23.2% stake in Centratama at $136.5m USD (1.95 trillion Indonesian Rupiah) – see below.

Given that all public shareholders may no longer own Centratama, following the tender offer, Digital Colony’s EdgePoint could subsequently delist the company from the Indonesia Stock Exchange and merge it into the broader EdgePoint Infrastructure business.

Mandatory Tender Offer – EdgePoint Infrastructure (EP ID), Centratama

EdgePoint Infrastructure is offering a purchase price of 269 Indonesian Rupiah per share for the 2.57 billion shares owned by public shareholders in Centratama. Therefore, EdgePoint is valuing the 8.25% stake in Centratama at $48.6m USD (692 billion Indonesian Rupiah).

As a reference point, EdgePoint Infrastructure is offering a 36% premium to public shareholders, compared to the price of 198 Indonesian Rupiah per share that it paid, in July 2021, to purchase a 33% stake in Centratama from Northstar Group.

Timing

EdgePoint Infrastructure’s tender offer will be open to shareholders of Centratama for 30 days, with closing on October 20, 2021. Subsequently, payment will be made to public shareholders that accept the mandatory tender offer, by November 1, 2021.

Share Purchase Agreements – EdgePoint Infrastructure, Northstar, Gray Reef

EdgePoint Infrastructure has struck separate share purchase agreements with Northstar Group (Clover Universal Enterprise Limited) and Gray Reef International Ltd to buy 6.0 billion shares in Centratama. Specifically, EdgePoint will acquire from:

  • Northstar Group: 4.66 billion shares in Centratama, equating to a 14.9% stake. Notably, this is the remainder of Northstar Group’s shareholding in Centratama
  • Gray Reef International: 1.38 billion shares in Centratama, equating to a 4.4% stake

Importantly, Gray Reef International’s shares are included in the 2.57 billion shares owned by public shareholders (above). However, Northstar Group’s 4.66 billion shares are in addition to the shares owned by public shareholders.

As a result, Dgtl Infra assumes EdgePoint Infrastructure purchases Northstar Group’s remaining 4.66 billion shares in Centratama for a similar price, as its offer to public shareholders, of 269 Indonesian Rupiah per share. Therefore, EdgePoint would value the 14.9% stake in Centratama at $88.0m USD (1.25 trillion Indonesian Rupiah).

Timing

EdgePoint Infrastructure intends to exercise its right to purchase Northstar and Gray Reef’s shares before or by March 31, 2022.

Towers and DAS Portfolio – Centratama

As of February 2021, Centratama manages 3.8k towers across Indonesia, which have a 1.59x tenancy ratio. Additionally, the company operates 864 in-building distributed antenna system (DAS) sites with a 1.82x tenancy ratio. In total, Centratama’s portfolio comprises 4.7k towers and DAS sites.

EdgePoint Infrastructure – Overview

EdgePoint Infrastructure has amassed a portfolio of 10.0k+ sites, including Centratama, which comprises:

  • Indosat Ooredoo: 4.2k towers in Indonesia through a sale-and-leaseback transaction
  • Centratama: 4.7k towers and DAS sites in Indonesia, with a potential 100% ownership interest
  • Asiaspace: 178 towers in Malaysia by purchasing the company’s towers
  • Undisclosed: ~1.0k+ towers in Malaysia through two transactions that have not yet been disclosed

Ownership

DigitalBridge’s private equity fund, Digital Colony Partners II, and Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund, via the entity Platinum Spring B 2019 RSC Limited, own EdgePoint Infrastructure. Specifically, Digital Colony Partners II has a 65.9% ownership interest, while Abu Dhabi Investment Authority (ADIA) holds a 34.1% stake.

Finally, as of May 31, 2021, EdgePoint Infrastructure’s total equity capital was $671m USD.

Adam Simmons is the Founder & CEO of Dgtl Infra. He started his career with an S&P 500-listed big box retailer, in an operations management role. Adam's entrepreneurial "itch" led him to start a 5G-driven company, focused on innovative retail solutions using augmented reality and shoppable videos, which was eventually sold to an advertising and consulting group. After, realizing the potential of 5G, Adam shifted his efforts towards investing in the "building blocks" of 5G - known as digital infrastructure, completing a number of strategic investments, buying cellular towers, data centers and fiber networks.

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