Singtel to sell stake in Trustwave at US$205 million enterprise value
Michelle Zhu
SINGTEL’S wholly-owned subsidiary Singtel Enterprise Security (US) has agreed to sell all its equity interest in its Chicago-based cybersecurity arm, Trustwave, for an enterprise value of US$205 million, comprising a secured note and cash.
The buyer is MC2 Titanium, a growth equity fund founded by the executive leadership team of advisory firm The Chertoff Group.
On Monday (Oct 2), Singtel said the divestment is not expected to have a material impact on the group for the financial year ending Mar 31, 2024.
Following the sale, Trustwave will be reclassified as a subsidiary held for sale as at Sep 30, 2023, and will be deconsolidated from the group’s financials.
The transaction is expected to be completed by Q4 2023, and is subject to regulatory approvals and customary closing conditions.
Singtel’s announcement follows the completion of a strategic review of Trustwave, which concluded in September 2023.
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It confirms earlier reports that the group was moving forward with its planned divestment of its cybersecurity arm.
An August 2022 article by Bloomberg said the deal could fetch US$200 million to US$300 million, citing people familiar with the matter.
At the time, sources told Bloomberg that considerations were preliminary, though Singtel had been speaking with financial advisers on Trustwave’s potential divestment.
Trustwave, which provides cybersecurity services in the US, comes under Singtel’s group enterprise segment.
In 2015, Singtel completed its acquisition of its 98 per cent interest in Trustwave for US$770 million after accounting for working capital adjustments. This was lower than the initial US$810 million price tag, when the deal was first announced earlier in the year.
Based on Singtel’s latest financial statements for the full year ended Mar 31, 2023, Trustwave contributed operating revenue of S$163 million – representing a 55.7 per cent decline from S$368 million in FY2022.
Its loss before interest, taxes, depreciation and amortisation (Lbitda) for the period was relatively unchanged at S$116 million.
Trustwave’s FY2023 loss before interest and taxes (Lbit) before associates’ contributions stood at a narrower S$133 million, compared with S$145 million the previous year.
These figures were consolidated based on statutory accounts, which included revenue earned as a vendor to other entities in Singtel.
Trustwave’s Lbitda for the first quarter ended June 2023 was S$25 million, as opposed to S$29 million in Q1 FY2022. Its Lbit before associates’ contributions stood at S$29 million, compared with S$33 million the previous year.
Shares of Singtel were trading S$0.02 or 0.8 per cent higher at S$2.44 as at 9.38 am on Monday, after the group announced the sale.
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