Axiata inks Boost stake sale with Great Eastern

Proceeds from the transaction will fund the firm’s DFS business expansion plans over the next year in Malaysia and the region


AXIATA Group Bhd is selling a 21.88% stake in its digital financial services (DFS) arm, Boost Holdings Sdn Bhd, to Singapore-based insurer Great Eastern Holdings Ltd for US$70 million (RM299.36 million) to boost its DFS business regionally.

Axiata Digital Services Sdn Bhd will own the remaining balance in Boost Holdings, which manages Axiata’s e-wallet, Boost, as well as the group’s micro-financing and micro-insurance business under Aspirasi.

The investment marks the second collaboration between telecommunications player Axiata and Great Eastern, a unit of Oversea-Chinese Banking Corp Ltd, following a micro-financing and micro-insurance agreement signed last year.

“We are looking at customer innovations with this partnership, especially during the Covid-19 period where cash is deemed unsafe,” Axiata Digital Services CEO Mohd Khairil Abdullah said at a press conference in Kuala Lumpur yesterday.

“It is really about the population that Great Eastern is not currently serving, the segments which are a bit more difficult to reach due to Great Eastern’s distribution technology.”

Proceeds from the transaction, which is expected to be completed in the next few months, will fund the firm’s DFS business expansion plans over the next year in Malaysia and the region.

The DFS business will also potentially house the group’s digital bank.

“When that (digital bank) happens, we are looking to establish a consortium to apply for the licence and we would need additional sources when we cross the bridge,” Mohd Khairil said.

The group has “been through a series of dialogues” with Bank Negara Malaysia (BNM) on acquiring a digital banking licence, he added.

“We are taking it seriously. A team has been set up to detail out the business plan and mobilise the assets.

“As of now, we are still in discussions with partners. We believe having strategic partners with specific capabilities and certain consumer segments that we don’t currently serve is necessary.”

In February, Axiata said it was in talks with 11 potential partners, including banks, to bid for one of Malaysia’s five maiden digital banking licences.

It engaged BNM on the exposure draft for digital banking regulations, which was issued in December last year.

The policy document is expected to be finalised by the first half of 2020. Applications for licence will be open upon issuance of the document.

Other contenders reported to be eyeing a slice of the digital banking pie include e-hailing firm Grab Holdings Inc, gaming firm Razer Inc, AirAsia Group Bhd and lender CIMB Group Holdings Bhd.

Axiata deputy group CEO Datuk Mohd Izzaddin Idris also confirmed that the group has been shortlisted as one of the bidders for Myanmar telecommunication tower firm Irrawaddy Green Towers Ltd (IGT), as reported by Myanmar-based newspapers.

“We are on the shortlist and it is in line with our trajectory for edotco Group Sdn Bhd (Axiata’s telecommunication tower unit) to grow its current base of some 20,000 towers to 50,000,” he said.

“However, we are also looking at other opportunities in the region as well, not just in Myanmar. If we look at emerging markets such as Vietnam and Thailand, we are not there yet while we recently opened an office in the Philippines.”

China’s Guodong Group and global private equity firm CVC Capital Partners are reported to be the other two shortlisted bidders.

IGT is owned by Singapore-based Irrawaddy Tower Asset Holding Pte Ltd and estimated to be worth US$800 million (RM3.42 billion).