Telco giant PLDT Inc. announced the beginning of its exit from Germany’s Rocket Internet as it seeks to raise money to finance its historic capital spending of P58 billion in 2018.
PLDT told the Philippine Stock Exchange it committed to sell around 6.8 million of its shares back to Rocket Internet for about 163.2 million euros (P10.5 billion).
This represented more than half, or 67.4 percent, of its roughly 10.1 million shares in the company, which recently announced the buyback of up to 15.47 million shares at 24 euros apiece. PLDT, through PLDT Online, currently owns about 6.1 percent of Rocket Internet.
PLDT first invested in Rocket Internet in 2014, lured by the company’s ambitious goal of rapidly replicating successful startups models and rolling these out in emerging markets.
At an investment of 333 million euros, it was hailed as the largest ever overseas tech investment by a Philippines-based company. At the buyback price, PLDT is selling its shares at a loss of roughly 27 percent.
Among Rocket Internet’s businesses at the time were online retailers such as Lazada and Zalora. But stiff competition prompted it to change course. It sold Lazada to China’s Alibaba Group in 2016. Last year, the Ayala Group acquired a 49-percent stake in Zalora Philippines.
By 2016, PLDT chair and CEO Manuel V. Pangilinan was describing the investment in Rocket Internet as “disappointing”. But PLDT decided to hold off the sale, given that the company’s market value then was down about half of PLDT’s entry price.
In its PSE disclosure, PLDT noted it has yet to finalize the final number of shares to be sold.
“The final number of PLDT Online tendered shares accepted by Rocket will be determined after the offer period which is expected to end on May 2, 2018. If greater than 15,472,912 Rocket shares are tendered, the Rocket shares to be sold by PLDT Online will be reduced proportionally,” PLDT said in the filing.
PLDT had been hinting at a sale since late 2017. This was because of plans to pour larger investments on its network infrastructure.