Singapore Technologies Engineering and Singapore Power are selling their broadband joint venture SPTel to Seraya Partners for an enterprise value of $290 million.
SPTel was started by SP in 1997 and in May 2017, ST Engineering acquired a 51% stake. Seraya Partners is a private equity firm focusing on infrastructure investments, with an AUM of US$1.8 billion as indicated on its website.
"This proposed transaction will enable SPTel to grow under a new owner whose primary mandate is in investing and growing digital infrastructure platforms.
"With this strategic alignment, SPTel will be better placed to scale and to provide a more diverse network in Singapore," state ST Engineering and SP in their July 17 joint statement.
ST Engineering says the sale will result in a one-off gain of around $80 million based on its carrying value for SPTel of around $65 million.
Besides the one-off gain, ST Engineering says this deal is not expected to have any material impact on its NTA and earnings for the current financial year.
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The agreed sum translates into an implied EV/revenue multiple of 4.1x and EV/EBITDA multiple of 21.4x based on SPTel’s revenue and EBITDA for the year ended Dec 2024. In addition, the sellers may receive an earn-out amount of up to $15 million if certain buyer’s return thresholds are met in the future.
In the year ended Dec 2024, SPTel reported a revenue of $72 million and a net loss of $4 million.
The proposed transaction is expected to close in the fourth quarter of 2025, subject to customary closing conditions, including the approval of the regulators.
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Just less than a month ago, ST Engineering announced plans to divest its construction machinery unit in the US, Leeboy, for US$290 million.
ST Engineering shares closed at $8.34 on July 16, up 0.12%. It is the best-performing STI stock year to date, with a gain of nearly 80%.
