China Mobile gets 15.5% stake in HKBN in bid to fend off rival I Squared Capital
Company agrees to pay about US$154.6 million for the block of shares from private equity firm TPG
I Squared Capital’s potential takeover offer for Hong Kong internet provider HKBN is facing hurdles, as it tries to convince China’s sovereign wealth fund of the merits of the deal and a competing state-backed bidder built a significant stake.
Rival suitor China Mobile agreed to acquire a 15.5 per cent holding in HKBN from buyout firm TPG at HK$5.23 per share, the same as its planned offer price for the whole company, according to a Hong Kong exchange filing Wednesday. China Mobile said it plans to complete the purchase no later than Nov. 28.
The latest deal, worth HK$1.2 billion (US$154.6 million), effectively gives state-backed China Mobile a blocking stake that could prevent another suitor from getting full control of HKBN and taking it private.
Miami-based I Squared already owns broadband operator HGC Global Communications, where sovereign fund China Investment Corp is a minority investor, and wants to combine it with HKBN. So far, I Squared has not been able to secure approval from CIC to move forward with a formal offer for HKBN, people with knowledge of the matter said.
The US infrastructure investor has been working to line up more equity co-investors for its potential offer, the people said, asking not to be identified because the information is private. It’s also been analysing the possible antitrust implications of a deal, according to the people.
HKBN said in an emailed statement Thursday that its board is still evaluating its options, and negotiations with China Mobile and I Squared are ongoing. The board has not formed any definitive views or reached any legally binding agreement with either party, it added. A representative for I Squared declined to comment, while a spokesperson for CIC did not immediately respond to emailed queries.