The deal completes the series of transactions that began last July that saw Japan’s banking behemoth MUFG take an 8-percent stake in GCash, effectively valuing the popular mobile phone-based payment service at $5 billion.
“Mitsubishi has always been very interested in the retail payments business in the Philippines,” said an official from the investment banking community familiar with the transaction.
The official explained that the Japanese multinational has a large presence in the retail business in addition to its heavy industry lines.
“Mitsubishi is huge in Japan,” the official added, explaining Mitsubishi’s interest in GCash. “They own Lawson [convenience stores]. They’re one of the largest retailers. They’re in logistics. They have banks. They have ATMs in Lawson branches. They know the power of consumer finance and transactions.”
The transaction was brokered by Morgan Stanley, sources revealed.
The deal calls for Mitsubishi to acquire 50 percent of Ayala’s stake in AC Ventures which, in turn, owns Globe Fintech Innovations Inc., more popularly known as Mynt, the owner of GCash.
Ayala’s 8-percent stake in GCash was valued at P23 billion last July.
Separately, a company source explained to InsiderPH that the latest deal with Mitsubishi values Mynt at exactly the same price on a per share basis as that of MUFG which was announced in early August. The slightly higher total price for Mitsubishi which will be officially announced on the morning of Oct. 18, Friday is due to the additional "cost of reimbursement, including cost of capital" and other costs.
"That's the deal that's been pre-agreed with all parties," the source said.
As part of the deal, AC Ventures will issue primary shares and sell them to Mitsubishi, which will allow the latter to own half of the Ayala-controlled venture capital fund. Mitsubishi will end up indirectly owning 6.5 percent of Mynt.
Ayala, meanwhile, will receive cash, some of which will be used to retire loans it took on to finance AC Ventures’ stake that matched MUFG’s entry in GCash last July.
InsiderPH learned that the talks between Globe Telecom, Ayala and Mitsubishi were proceeding in parallel with negotiations with MUFG last July. But the negotiations with Mitsubishi were not concluded in time for the fast-moving MUFG deal. This called for Ayala to step in temporarily to acquire an 8-percent stake, which it had planned to sell to Mitsubishi down the road.
The Zobel family and its Ayala conglomerate have a longstanding business relationship with Mitsubishi — Japan’s second-largest corporation — dating back to 1974, the official pointed out.
Note: This story was updated to include additional insights from sources about the deal.
Senior Reporter
