During a Sias session with investors, Kevin Neo, CEO of KIT’s trustee-manager, justified the GMG’s valuation. The independent financial adviser PrimePartners had “analysed the valuation of GMG based on the implied EV/Ebitda ratio of GMG, which at 6.7 times is within the range of the EV/Ebitda ratios of the comparable companies, and lower than both the mean and median EV/Ebitda ratios of 7.3 times and 8.0 times, respectively. In addition, the implied P/E ratio of GMG of 9.8 times is within the range of the P/E ratios of the comparable companies and lower than both the mean and median P/E ratios of 13.8 times and 11.4 times, respectively,” Neo said.
In replies to questions from unitholders about the quality of GMG’s fleet and its market share, KIT’s trustee-manager points out that GMG possesses significant scale and operational excellence, managing and maintaining over 450,000km of subsea cables globally as of March, which accounts for approximately 31% of the global maintained subsea cable length, along with its partners.
“Additionally, GMG has installed over 320,000km of subsea cables worldwide as of March 2025, which amounts to approximately 20% of the global installed subsea cable base length. The 31% and 20% percentages refer to subsea cable base length and not market share,” answers the trustee-manager following Corporate Monitor’s questioning of GMG’s market share.
Corporate Monitor, in its no-holds-barred report on KIT, points out that GMG’s fleet of six cable-laying vehicles (CLVs) is technically obsolete, and US$1 billion ($1.3 billion) will be needed to refresh the fleet. The lead time for delivery is lengthy, spanning several years.
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The trustee-manager points to various regulatory bodies that have checked GMG’s fleet. “Technical due diligence confirmed that there were no material adverse findings regarding the condition of GMG’s fleet. Regular maintenance protocols are in place, including the repair and replacement of critical equipment, as well as statutory dry docking for inspections, repairs and certification. These activities are conducted in accordance with the International Convention for the Safety of Life at Sea (SOLAS) and are fully compliant with international maritime conventions such as the International Convention for the Prevention of Pollution from Ships (MARPOL) and the Maritime Labour Convention (MLC),” says the trustee-manager.
In a reply to questions on the age of GMG’s six vessels, KIT’s trustee-manager points out that the average age of 29 years is in line with the 40–45 years average life span of vessels used for maintenance and installation, based on the Hardiman commercial due diligence report.
“None of the six vessels are nearing retirement or require significant capital expenditure beyond statutory maintenance and dry docking to remain class compliant,” the trustee-manager says.
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KIT’s investment in GMG and its future funding will be through a combination of internal sources of funds and/or external borrowings of the trust. A portion of the divestment proceeds post the sale of Philippine Coastal and the sale of a partial stake in Ventura will also be redeployed into the GMG acquisition.
GMG’s valuation is based on a discounted cash flow analysis, using an average age of 40-45 years, which includes the average age of the fleet. The independent financial adviser, PrimePartners, recommended that Resolutions 1 and 2 be on standard commercial terms and are not prejudicial to the interests of KIT and its minority unitholders.
On Nov 11, unitholders of KIT voted overwhelmingly in favour of both resolutions.
