NeraTel to sell payment unit for S$88m

Singapore

TELECOMMUNICATIONS and information network solutions provider Nera Telecommunications (NeraTel) has agreed to sell its payment solutions unit to French payments giant Ingenico Group for about S$88 million, the mainboard-listed group said in a Singapore Exchange filing on Friday.

It said it expects net proceeds of about S$71.5 million on the disposal, adding that the proposed sale of the entire payment solutions business across Singapore, Malaysia, Thailand, the Philippines, Indonesia and Vietnam would let it "sharpen its focus on the core network solutions business and strengthen the balance sheet".

NeraTel said the payment solutions unit accounted for around 26 per cent of the company's total revenue of S$181.5 million and approximately 21 per cent of its total earnings of S$13.4 million for its financial year 2015, adding that Ingenico's offer represented 35 per cent of NeraTel's S$251.5 million market capitalisation as at the close of trading on May 19.

Ingenico is listed on Euronext Paris and has "the world's largest payment acceptance network", NeraTel noted. The Paris-based group makes point-of-sale payment terminals and its largest rivals include American terminal maker Verifone.

Philippe Lazare, Ingenico chair-man and chief executive officer, said in a statement that its acquisition "will further strengthen Ingenico's relationships with banks and retail merchants in Southeast Asia and will enhance the deployment of Ingenico's entire product range in the region using NeraTel payment solu-tion's extensive distribution and services network".

NeraTel president and chief executive officer Samuel Ang said selling the payment solutions unit is "in line with our strategic objective of streamlining our business activities". The group also said it intends to return a significant portion of the net proceeds from the sale to its shareholders.

The agreed sale came after NeraTel posted in early May a 33.4 per cent drop in earnings to S$2.03 million for its first quarter ended March 31. Revenue also slid 11 per cent to S$37.5 million over the same period, weighed down partly by lower sales revenue from point-of-sales terminals in Thailand.

The proposed deal is subject to shareholder approval at an extraordinary general meeting to be held in the third quarter of this year, NeraTel said, but added that a majority shareholder has already irrevocably undertaken to vote in favour of the transaction. That shareholder is Asia Systems, an entity controlled by the Northstar Group, which owns around 53.38 per cent of NeraTel. Northstar is a Singapore-based private equity firm that focuses on South-east Asia.

NeraTel's financial adviser for the deal was Rippledot Capital Advisers, a Singapore-based boutique investment bank that recently advised Interplex Hold-ings's major shareholders CVC Capital Partners and Standard Chartered Private Equity in relation to Baring Asia Private Equity's $450 million privatisation offer for Interplex. It also advised logistics packaging firm Goodpack on its S$1.4 billion privatisation by private equity fund KKR in 2014.

Rippledot is currently advising Innovalues and Tat Hong Holdings on potential transactions involving both listed companies, a spokesman for the firm said.

NeraTel shares were up 0.5 cent at 70 cents on Friday.