TENCENT Holdings Inc., the operator of Chinese super app WeChat, and Kohlberg Kravis Roberts & Co. (KKR), a global investment firm based in New York, have signed a share purchase agreement with Voyager Innovations Inc. for them to take a “substantial minority stake” in the latter for $175 million—the largest foreign investment to date in a Filipino tech company.
With the fresh capital, Voyager can further scale up its digital services—particularly in digital finance—in the Philippines, an initiative which company president Orlando B. Vea said would trigger an “inflection point in digital adoption and financial inclusion.”
The two investors subscribed to newly issued shares. The transaction is expected to be closed sometime this quarter.
Under the agreement, the two companies will together hold a substantial minority stake in the Filipino tech company, while PLDT Inc. will remain the majority shareholder. The announcement did not include how many shares were purchased.
Voyager’s negotiations with Tencent made news earlier this year, but the talks bogged down eventually, with Manuel V. Pangilinan, who chairs both Voyager and PLDT, announcing in August that the company was in advanced negations with a group of “several private investors” for it to take a majority stake in Voyager.
Pangilinan declined to disclose the specific details of the transaction, but clarified that the amount of shares of PLDT in Voyager remained intact, adding that the shares purchased are newly issued.
Pangilinan added that the contract included a provision on the issuance of additional shares in Voyager for other investors to purchase.
The company, he added, is in talks with “two or three” other potential investors.
This, however, will reduce the Filipino telco’s ownership to less than 50 percent, while still remaining as the largest shareholder.
“Having global powerhouses such as KKR and Tencent as investors in Voyager Innovations demonstrates not only their confidence in the company’s ability to execute its vision, but also their confidence in the Philippine technology industry as a whole,” he said.
Vea added that the new investors will enable greater access to mobile payments and the Internet as a whole for the country’s population. “This is a watershed moment not only for Voyager Innovations but also for the Philippines. With this investment by KKR and Tencent, we will trigger an inflection point in digital adoption and financial inclusion in the country,” he said.
KKR Southeast Asia Director Terence Lee said his group’s investment furthers its investment in “payment leaders in emerging market.”
“We look forward to leveraging our industry expertise and resources to help enhance the company’s mission of financial inclusion and accelerate its growth at a time when the digital economy is more important than ever,” he said.
KKR’s investment in Voyager is the first private equity investment in the Philippines.
“Voyager Innovations connects the growing smartphone population in the Philippines to online payments and financial services. Tencent is glad to support Voyager Innovations and to advance financial inclusion,” Tencent Chief Strategy Officer James Mitchell said.
The transaction, according to Pangilinan, is not subject to the compulsory merger notification requirement of the Philippine Competition Commission (PCC).
Bank of America Merrill Lynch acted as financial advisor to Voyager Innovations.
Voyager officials first floated the idea of taking in a foreign partner in 2017, when Pangilinan described the potential investor as a group that will help the company realize its Asian expansion dream.
What made Voyager attractive to foreign investors? Pangilinan said the answer lies in the numbers. Digital wallet PayMaya grew by more than five times during the first half of the year; small loans disbursement platform Lendr also doubled its unique customers during the said period.
Freenet, an app that allows users compli-mentary access to the Internet, saw unique accounts ballooning by 150 times. And financial investment arm Fintq was recognized as the Outstanding Financial Inclusion Partner at the 2018 Bangko Sentral ng Pilipinas Stakeholders Awards.
In the first six months of the year, Voyager posted a net loss of about P1.3 billion, significantly higher than the P300-million loss that it recorded last year.