SINGAPORE - Singtel’s wholly owned subsidiary Singtel Enterprise Security (US) has agreed to sell all its equity interest in its Chicago-based cyber-security arm, Trustwave, for an enterprise value of US$205 million (S$280.6 million), comprising a secured note and cash.
The buyer is MC2 Titanium, a growth equity fund founded by the executive leadership team of The Chertoff Group, an advisory firm.
Singtel said the divestment is “in line with its strategic reset to refocus its business in Asia-Pacific and improve shareholder value by optimising resource allocation”.
It is not expected to have a material impact on the group for the financial year ending March 31, 2024, Singtel added in a filing with the Singapore Exchange on Monday.
Following the sale, Trustwave will be reclassified as a subsidiary held for sale as at Sept 30, 2023, and will be deconsolidated from the group’s financials.
The transaction is expected to be completed by the fourth quarter of 2023, and is subject to regulatory approvals and customary closing conditions.
Singtel’s announcement follows the completion of a strategic review of Trustwave that concluded in September 2023.
An August 2022 article by Bloomberg said the deal could fetch US$200 million to US$300 million, citing people familiar with the matter.
Trustwave, which provides cyber-security services in the United States, comes under Singtel’s group enterprise segment.
In 2015, Singtel completed its acquisition of its 98 per cent interest in Trustwave for US$770 million after accounting for working capital adjustments. This was lower than the initial US$810 million price tag when the deal was first announced earlier in the year.
Based on Singtel’s latest financial statements for the full year ended March 31, 2023, Trustwave contributed operating revenue of $163 million – a 55.7 per cent drop from the $368 million in financial year 2022.
Trustwave’s loss before interest, taxes, depreciation and amortisation (Lbitda) for the period was relatively unchanged at $116 million.
These figures were consolidated based on statutory accounts, which included revenue earned as a vendor to other entities in Singtel.
Trustwave’s Lbitda for the first quarter ended June 2023 was $25 million, widening from $29 million in the year-ago period. Its Lbit before associates’ contributions stood at $29 million, compared with $33 million in the previous year.
In September, Singtel announced that it will sell a 20 per cent stake in its regional data centre business to American private equity giant KKR & Co for up to $1.1 billion.
Singtel shares rose two cents, or 0.8 per cent, to close at $2.44 on Monday. THE BUSINESS TIMES
