Philippines next battleground of Chinese payment giants

Chinese internet giant Tencent Holdings Limited on Thursday confirmed its entry into the Philippine market.

Headed by China's richest man, Huateng "Pony" Ma, Tencent will be acquiring a "substantial" minority stake in PLDT unit Voyager Innovations Inc., which is involved in financial technology through units such as PayMaya, freenet, Lendr, KasamaKA, and Smart Padala.

In a statement released on Thursday evening, PLDT said it signed agreements with Tencent Holdings and global private equity firm KKR & Co. Inc. to separately subscribe to a total of up to $175 million worth of newly-issued shares in Voyager.

"The injection of fresh capital in Voyager marks the largest investment to date in a Philippine technology company, uniquely elevating the local technology industry and the entire country as an exciting destination for breakthrough and relevant innovations, particularly for emerging markets," PLDT said.

"Upon the closing of the transaction, which is expected within the fourth quarter of 2018, PLDT will remain as the majority shareholder of Voyager Innovations," the company said.

PLDT also said that the agreements contain provisions for Voyager to issue additional shares to other investors which, if realized, would reduce PLDT's ownership to less than 50 percent while still remaining the largest shareholder.

"Having global powerhouses such as KKR and Tencent as investors in Voyager Innovations demonstrates not only their confidence in the company’s ability to execute its vision, but also their confidence in the Philippine technology industry as a whole," said PLDT chairman Manuel Pangilinan.

"Voyager Innovations connects the growing smartphone population in the Philippines to online payments and financial services. Tencent is glad to support Voyager Innovations and to advance financial inclusion,” added Tencent chief strategy officer James Mitchell.

According to PLDT, the investment in Voyager is not subject to the compulsory merger notification regime under the Philippine Competition Act.

It also said that the Bangko Sentral ng Pilipinas (BSP) confirmed that it interposes no objection to the investment.

Talks of a possible divestment in Voyager Innovations firmed up in August, according to Pangilinan.

"It will have significant gains to the accounts of PLDT... It could fund the operations of Voyager for expanding in the next three to four years," he said then.

Tencent's rival Alibaba, through Ant Financial Services Group and headed by billionaire Jack Ma, already has a presence in the Philippines after it acquired a 45-percent stake in Globe Fintech Innovations Inc. (Mynt) in 2017.

According to Voyager, it has tapped the Bank of America Merrill Lynch is acting as financial advisor, and Latham & Watkins and Picazo Buyco Tan Fider & Santos as legal counsel.

Meanwhile, KKR and Tencent tapped Paul, Weiss, Rifkind, Wharton & Garrison, and Sycip Salazar Hernandez & Gatmaitan as legal counsel. — BM, GMA News