SINGAPORE - Singapore sovereign wealth fund GIC announced on Friday that it will invest £1.1 billion (S$2.26 billion) alongside four other institutional investors to acquire 33 per cent or one-third of Hutchison Whampoa's merged British mobile phone giants, 02 and Three, for a total of £3.1 billion.
The other institutional investors are Canada Pension Plan Investment Board and Canadian public pension fund Caisse de dépôt et placement du Québec, a subsidiary of the Abu Dhabi Investment Authority and Brazilian investment bank BTG Pactual.
They will be buying stakes in Hutchison 3G UK Holdings (CI) Ltd., which will be the combined Three UK and O2 UK businesses, Hutchison Whampoa said earlier on Friday.
Three's owner, Hutchison Whampoa, controlled by the Hong Kong tycoon Li Ka-shing, recently unveiled plans to acquire Telefonica's O2 unit in the UK for up to £10.25 billion to create the country's biggest wireless provider by customers. The carriers together have more than 30 million subscribers, or about 44 per cent of the UK mobile market.
GIC said Friday its investment is conditional on and will occur concurrently with the completion of Three UK's acquisition of O2 UK and the combination of both businesses, which are subject to EU regulatory approvals.
The full proceeds of the investments will be used, together with a committed bank facility of £6 billion, to fund the O2 UK acquisition from Telefonica, GIC added.
The consortium of investors will contribute a further £339 million as part of a payment to Spain's Telefonica if the enlarged telecoms business performs well.
The Three-O2 merger is the second major transaction in the UK mobile sector in quick succession, with BT expected to finalise the terms of its £12.5 billion takeover of EE - currently the country's biggest network.
The deal comes as Li, Hutchison's 86-year-old chairman, is overhauling his business empire before handing the reins to his eldest son Victor Li. It also deepens a push into the European telecommunications industry that Hutchison entered more than a decade ago, Bloomberg said.