SoftBank Corp Invests RM250m In Axiata’s ADA For 23.07% Stake

KUALA LUMPUR (May 11): SoftBank Corp is investing RM250 million (US$60 million) in Axiata Group Bhd’s digital marketing subsidiary ADA for a 23.07% stake in the company, establishing ADA’s RM1.07 billion (US$260 million) valuation.

Axiata Digital will remain as the majority shareholder of ADA with a 63.47% stake, following the entry of SoftBank. Axiata Digital is a 96.47% subsidiary of Axiata.

Axiata president and group chief executive officer (CEO) Datuk Izzadin Idris said the Japanese telecommunications company is both a financial and strategic investor, given that it has interests in other digital companies around the world, including LINE, Cinarra and Incudata.

He added that ADA expects to benefit from the unlocking of significant global synergistic opportunities.

Besides that, ADA will be established as SoftBank’s core digital and data marketing partner in Asia.

“We are delighted to welcome SoftBank as a business partner and co-shareholder of ADA. Now serving over 1,300 clients in the region, ADA’s revenue has tripled since its launch three years ago, recording positive EBITDA (earnings before interest, taxes, depreciation and amortisation) in the last two years.

“Together with our existing Sumitomo partnership, we can expect this strategic alliance to further fuel ADA’s growth momentum within the region as it unlocks synergistic opportunities that will form one of the pillars to deliver on Axiata’s Digital Champion ambition,” said Izzadin during a press briefing earlier today.

Moreover, he said more brands in Asia are turning to data analytics and artificial intelligence (AI) to differentiate their products and services in the highly competitive digital marketing industry, therefore the added capital from SoftBank will put ADA in a good position to benefit from this trend.

ADA CEO Srinivas Gattamneni, meanwhile, said the company will be using the additional funding to develop big data platforms for consumer insights and predictive analytics, as well as the development of AI models, with a primary focus on digital marketing.

The company will also be investing in technology for the automation of content creation for the advertising industry.

“The post-Covid-19 norm is a ‘digital-first’ economy, which ADA has been successfully building towards. We are very excited to partner with SoftBank as a valuable ally in our next phase of growth. 

“The capital and business alliance with SoftBank will further propel ADA’s digital, analytics and marketing solutions to benefit our customers,” Srinivas said.

SoftBank representative director and chairman Ken Miyauchi said the group had been on its Beyond Carrier growth strategy since its listing in 2018, expanding into new business areas outside of its core telecommunications business.

“This alliance with ADA heralds a new theme in this growth strategy as it will enable us to deploy our digital marketing business outside Japan by leveraging ADA’s presence in Asia as a leading data and AI company. 

“We look forward to collaborating closely with the ADA team so we can help companies in the Asia-Pacific region accelerate the digital transformation of their businesses,” said Miyauchi.

On the other hand, when asked if Axiata has any plans to list ADA, Izzadin said there are no plans to do so currently.

“Any listing exercise would be for the purpose of raising capital. As it is, this company can already attract capital without being listed, so there are no listing plans currently, although it could be the natural progression in the years to come,” he said.

Izzadin also provided a minor update on Axiata’s intention of applying for a digital banking licence, saying that the group is working together with a partner to prepare for the submission.

Bank Negara Malaysia (BNM) previously set the deadline for applications on June 30 this year.

Izzadin added that the group will be announcing more details of its partner for the venture soon.

At 11am, Axiata was down one sen or 0.27% at RM3.65, giving it a market capitalisation of RM33.48 billion.

Source: The Edge Markets