Which sectors are driving Asia TMT financing?

Telecom, media and tech M&A and fundraising deals in Asia are booming in 2017, and all kinds of TMT companies across the region are also taking opportunities to lock in low rates to refinance and raise new debt. That trend looks set to continue, which is fuelling a healthy flow of financing transactions for the region’s lenders. Yedda Wang, TMT Finance Senior Reporter for Asia, looks at which sectors and specific deals will be driving financing activity for the second half of 2017.

Classic telecom consolidation, tower infrastructure deals and datacentres financing and M&A are some of the key themes driving financing deals in the region, mainly via M&A activity. Some deals have already been announced, some are still to follow.

The biggest telecom M&A deal so far in North and Southeast Asia has just been officially announced: the sale of Hutchison Telekom Hong Kong’s fixed line business Hutchison Global Communications Limited (HGC) to I Squared Capital for US$1.86bn. The buy-side is now raising around US$900m of debt to help finance the acquisition. Three banks, Deutsche Bank, Credit Suisse and Credit Agricole – as exclusively reported by TMT Finance – are now working on the loan. Although it is still in early stages, the loan could possibly be syndicated down as banks finalise the deal.

Last week, satellite communication service provider Speedcast, also agreed to acquire its US-based peer UltiSat at the price of up to US$100m. To support this acquisition, Speedcast has been preparing a debt financing package between US$50m to US$60m with its relationship banks to back the takeover, as exclusively reported by TMT Finance in mid-July.

A current hive of deal activity also looks set to shake up Indonesia’s tower market and require financing. STP and KIN Towers are both for sale and players such as Protelindo or Tower Bersama could consolidate the market.

Aside from M&A, companies are looking at new rounds of capex funding and refinancing options, which are also helping to boost financing activity in Asia’s telecom and towers space. On the radar current deals in the pipeline include Huawei, which is prepping a mega debt financing deal (see TMT Finance this week) and Indonesia’s independent tower operator, Northstar Group-backed PT Centratama Telekomunikasi Indonesia, which is said to be planning to take a syndicated loan for capex and refinancing existing debt, TMT Finance reported in July.

Activity and demand for datacentre, cloud and colocation services also appears to be booming in Southeast Asia, China and India in particular. According to sources, there is a huge requirement for funds to help build new datacentres and back M&A as companies and investors look to expand their reach and develop their platforms and offerings across Asia.

In China, TMT Finance has exclusively reported that GDS Holdings took loans from banks and vendors for building up datacentres in Shenzhen, Shanghai and Beijing. Another Chinese data centre services provider, Nasdaq-listed 21Vianet Group was planning a bond issue to raise several hundreds of millions of dollars for its overseas datacentre-related projects. Although the roadshow didn’t receive much interest from investors, the company is said to relaunch the bond issue in H2 this year. (See TMT Finance’s exclusive report this week).

Later this year, another Chinese cloud computing company is anticipated to make its debut to Southeast Asian market. Infrastructure as a Serive(IaaS) and Platform as a Service (PaaS)-based cloud computing company QingCloud is to expand its business to Southeast Asia and India. According to TMT Finance’s exclusive interview with its CEO, Richard Huang, the company plans to invest around RMB100m (US$15m) in Southeast Asia for a public cloud business and will build datacentres in either Philippines or Malaysia. The company will probably have financing requirements for building datacentres in Southeast Asia, and is open to international banks, according to the company.

In Southeast Asia, two datacentre platforms have been set up and are both backed by blue chip private equity firms: Princeton Growth Ventures and Bridge Data Centres, backed respectively by Warburg Pincus and Bain Capital. Warburg committed up to US$300m in Princeton Growth Ventures, which will target acquisitions of cloud and datacentre assets which are valued between US$500m and US$1bn, with a clear focus on cloud and datacentre assets in India, China, Southeast Asia, the Middle East and Latin America. (See TMT Finance’s exclusive interview with Princeton founder Rangu Salgame), while Bridge DC, founded by Digital Realty’s former APAC head Kris Kumar, plans to invest between US$400m and US$500m in the Indian market over the next two years and is in advanced stages of acquisition in other markets in Asia Pacific with a further US$220-250m of investment.

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