TRG Pakistan's associate to sell its stake in E-Telequote

TRG Pakistan Limited has said that its associate, TRGIL, has entered into an agreement to sell all of its stake in its health insurance marketing subsidiary i.e. E-Telequote Limited to a leading US-based marketing company.

“TRG Pakistan Limited would like to announce that its associate TRGIL has entered into a definitive agreement to sell all of its economic stake in its health insurance marketing subsidiary to a leading US-based marketing company active in the insurance and financial services industry,” stated TRG Pakistan in a statement on Tuesday.

As per details provided by TRG Pakistan, the key financial terms of the transaction are as follows:

Total enterprise value of the Company : $600 million

Estimated implied equity value at closing : $450 million1

Estimated consideration for TRGIL : $309 million

“In addition to the above consideration, there is a potential earn-out of up to $35 million payable to TRGIL over the next two years, contingent on the successor company meeting certain financial targets in 2021 and 2022,” informed TRG Pakistan.

The company said that the said transaction is subject to regulatory approvals and other closing conditions and is targeted to close no earlier than 1 July 2021. “TRG Pakistan’s prorated stake at closing, excluding any earn-out and prior to net debt adjustment at TRGIL, will be approximately Rs 21.5 billion,” it said.

Meanwhile, Topline Securities informed that Primerica Inc, a Delaware Corporation has entered into a share purchase agreement with E-Telequote limited to acquire 80% of the shareholding at an EV of $600 million. “The remaining 20pc stake will be acquired by Primerica Inc over next four years,” it said.

It was learned that out of the proposed 80% stake TRGIL(45% owned by TRG Pakistan) is selling its full stake of 70.25% in the target company followed by 9.75% stake by management of E-Telequote

“We estimate that TRGIL with receive cash of $316.125 million (Rs 48 billion) from this transaction. Given 45% stake of TRG Pakistan in TRGIL, the impact on TRG will be $142.25 million or Rs 21.6 billion,” said Topline Securities.