Saudi Telecom Company’s (STC) sale of its stake in Saudi Digital Payments Company (STC Pay) to Western Union will have a positive impact that will support the strategic and expansion plans of the digital payment unit.
STC has agreed to sell 15 percent of its stake in the subsidiary for $200 million. The deal, which has yet to obtain all regulatory approvals from relevant authorities, will boost STC Pay’s capital to 1.45 billion riyals ($386.6 million), once completed.
“In the long term, the financial impact is expected to be positive. The deal has no impact on the profit or loss statement of STC,” STC said in a bourse filing.
“The completion of the deal is conditional upon obtaining all regulatory approvals from relevant authorities,” it added.
Upon completion of the deal, STC said Western Union will pay $133.3 million for a 10 percent stake in STC Pay. If STC Pay obtains a digital banking license, the buyer then pays another $66.67 million, increasing its equity stake to 15 percent.
STC Pay’s capital is pegged at 400 million Saudi riyals. Its shareholder loan worth 148 million riyals, which was provided by STC, would be converted into a capital upon the completion of the deal, Saudi Telecom explained.
“The proceeds of the deal will be used to finance STC Pay’s capital in order to enhance its internal resources and support its strategic and expansion plans,” the telecom firm said.
“STC will inject 400 million riyals as an additional capital which would increase STC Pay’s capital to 1.45 billion riyals upon the completion of the deal,” it added.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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