Karachi September 28 2021: A meeting of the Board of Directors of TRG Pakistan Limited will be held at 7:00 p.m. on October 5, 2021 to consider the annual accounts for the year ended June 30, 2021 and for the declaration of any entitlement.
TRG gained almost 5 percent after the announcement to close at PKR 168.0.
TRG Pakistan associate TRG International (TRGI) and its underlying portfolio companies have achieved some significant milestones during the current fiscal year to date. We are happy to report that TRGI has recently entered into a definitive agreement for the sale of 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. The total enterprise value of the subsidiary is $600 million, with an estimated implied equity value of $450 million at closing and estimated consideration for TRGI of $309 million. There is an additional potential earn-out of up to $35 million payable to TRGI over the next two years, contingent on the successor company meeting certain financial targets in 2021 and 2022. The 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 Rupees 21.5 billion.
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TRG Pakistan portfolio company in the outsourced customer interactions sector, that was listed on Nasdaq in August 2020, continues to win strategic new logos across key verticals, resulting in significant growth as well as decrease in client concentration. Consequently, its stock is trading above the IPO price.
TRG Pakistan portfolio company in the enterprise software sector continues to deliver powerful topline growth during the current fiscal year to date. The company has a robust revenue pipeline and is aggressively pursuing expansion in additional geographies. We expect the company to continue on this growth trajectory in the coming months. The Company successfully raised additional debt during the year, which was used to retire its relatively expensive Series D shares. TRGI used its portion of the buyback proceeds to partially pay down its high-cost debt.
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TRG Pakistan Limited 9Month Financial Review:
The value of the Company’s share in TRGI as of March 31, 2021 was Rupees 26.8 billion. This value was
Rupees 21.8 billion on June 30, 2020, representing an increase of Rupees 5.0 billion during the period and an overall increase that is more than seven times the value of its original investment. In addition to the
Company’s stake in TRGI, it also has other assets of Rupees 2.6 billion and liabilities of Rupees 4.9 billion resulting in net assets of Rupees 24.5 billion.
The Company recognized interest income of Rupees 117.6 million in its income statement, whereas it
incurred expenses of Rupees 27.6 million. In addition, its share of profit from associate was Rupees
8,413.3 million. Tax expense amounting to Rupees 1,277.8 million, mainly on account of deferred tax, was incurred during the period. As a result, the Company posted a net profit of Rupees 7,225.5 million for the period ended March 31, 2021.