Listed IP E-Games Ventures Inc. has sold its data center unit to sister company IP Converge Data Center Corp. as part of the rationalization of the group’s assets.
Both companies are expected to gain from the transaction, with IP E-Games getting a total of P120 million from the sale and IP Converge getting an additional revenue source.
In a disclosure, IP Converge said it had acquired 10 million shares, or a percent stake, in First Cagayan Converge Data Center Inc. (FCCDDI) for P12 a share from IP E-Games.
The purchase price is payable in three tranches.
“Payment for the FCCDDI shares will be come from the proceeds of the initial public offering (IPO) held by the company last December,” IP Converge told the local bourse.
FCCDDI, which was incorporated in 2007, is engaged in the information technology and communications business, offering Internet protocol systems, products and related services to licensed locators of the First Cagayan Leisure & Resorts Corp. economic zone.
“The acquisition is part of the strategic realignment of the various companies under the IPVG group,” IP Converge said.
Listed firm IPVG Corp. is IP Converge’s and IP E-Games’ parent firm.
“With the purchase of the FCCDDI shares, the company will be acquiring a very profitable data center business at a price-to-earnings ratio of 5.5 times, which is a discount to regional comparable companies,” IP Converge said.
In the meantime, IPVG CEO Enrique Gonzales said the proceeds of the sale would help finance the continued expansion of the group’s gaming business.
“It will help the company’s plans as the sale will generate P120 million for IP E-Games, which we will use to acquire more games and more Internet cafes,” Gonzales said in a text message.
The IPVG group is under a restructuring program. The move is aimed at attracting new investors that will help the company in its foray into new industries.
IPVG subsidiaries are set to be transferred to a new company. IPVG will then look for new partners that may want to pour funds into IPVG, without having to invest indirectly in IP E-Games and IP Converge.
Current shareholders of IPVG will own shares of both IPVG and the new company.—Paolo G. Montecillo