TRG Pakistan Limited’s associate — TRG International Limited — has entered into a definitive agreement to sell all of its economic stake in its health insurance marketing subsidiary to a leading US-based marketing company active in the insurance and financial services industry.
The key financial terms of the transaction are as follows:
- The total enterprise value of the company stands at $600 million.
- The estimated implied equity value at closing stands at $450 million.
- The estimated consideration for TRGIL stands at $309 million.
In addition to this consideration, there is a potential earn-out of up to $35 million payable to TRGIL over the next two years, contingent on the successor company meeting certain financial targets in 2021 and 2022, according to the stock filing document.
The transaction is subject to regulatory approvals and other closing conditions and is targeted to close no earlier than 1 July 2021. TRG Pakistan’s prorated stake at closing, excluding any earn-out and prior to net debt adjustment at TRGIL, will be approximately Rs. 21.5 billion.
It has been observed that the healthcare and technology sectors had a record boom over the last two years due to the pandemic, and Pakistani IT companies are no exception.
TRG Pakistan is one of the companies in the technology sector that had made a windfall profit in the last one and half years due to long-term and high-value projects awarded by foreign companies.
As of 31 December 2020, the value of TRG Pakistan’s share in TRGI was Rs. 25.7 billion. This value had stood at Rs. 21.8 billion on 30 June 2020, representing an increase of Rs. 3.9 billion during the period and an overall increase that is nearly seven times the value of its original investment.