Ladies and gentlemen, thank you for standing by. Welcome to Axiata Group's conference call. Throughout the presentation, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. Firstly, two housekeeping reminders. Please mute your phone during the presentation and kindly avoid using wireless headsets. Today, the conference call is hosted by Tan Sri Jamaludin, Group CEO, and Mohd Khairil Abdullah, Axiata Digital CEO. I would now like to hand the conference over to your speakers today. Thank you, sir. Please go ahead.
Good afternoon. This is Jamal, Group CEO for Axiata. Thank you for joining us to this analyst briefing, which is one of its kind. Normally, we talk about Axiata or even XL or Celcom, but this time around, it's all about ADS or our Axiata Digital Services. The big announcement that we've just announced this afternoon. I'm not going to do the briefing this time around. I'm going to pass to Khairil, who's the CEO for ADS, to give you a more detailed briefing. Khairil?
Sure. Thank you very much, Tan Sri Jamal. Ladies and gentlemen, this has been quite a momentous occasion for us. Axiata Digital has been in operation for a few years now. Finally, today, we have some kind of validation. I will talk a little bit about the journey so far. Then take questions right at the end. Let me start with page two of the presentation. If you go to page two, you will see that actually, Axiata Digital, whilst it may not have been known to a number of analysts for a long time, it's actually been in existence since 2013. It's gone through three distinct phases in its history. The first phase was a period of experimentation. We like to call it R&D. Back then, we realized as a telco that actually, the digital revolution was coming.
We foresaw a number of new opportunities, obviously some threats, but a number of new opportunities that we wanted to take advantage of. We did a number of different experiments, invested in some companies, largely for learning. At the peak of this phase, we actually had something like 30 different companies throughout our portfolio. Came towards the end of this period, where we then started thinking of capturing all of that learnings, then focusing those into three very distinct companies. One in financial services called Boost, one in digital advertising, ADA. Finally, our platforms business, Apigate. We have actually been focused as operators of this, unlike in our previous phase, where we had minority interest in some of these assets. In this phase, we were direct operators of three digital companies throughout this period, scaling and growing them very aggressively.
Phase 3 started towards the end of last year, what we were looking for was looking at some strategic partners that we could bring in. Not just bringing in the cash that was required for the businesses to actually grow the businesses, but also looking at other assets that these strategic partners could bring. Today marks an occasion where we actually had one of these partners, Mitsui & Co, invest very significantly into buying a stake into Axiata Digital. I should say, though, that there's also this other name there, Pegasus 7. You may have caught the news earlier in the week that alongside this deal that we've just done, there were five other assets that we had, which were not part of our core operating businesses within Axiata Digital. These were assets that we had minority interests of.
I'll go on to that in a short while, what we did was we took these five companies, transferred it into a fund, to be managed and operated by the fund. Now, if in the future there is an exit from these five companies, any of these five companies, and there's a profit around that, we will get to capture up to 85% of that profit. This is a carry interest structure that we've arranged with the fund manager. The fund manager keeps 15%, we carry 85% of that profit. That's Pegasus 7 as well. Actually, there's one more other deal that's not on this page here that we actually did a little while back. This was about a year ago, where Sumitomo, another Japanese investor, invested $20 million into ADA, our digital advertising business, as part of a round that they did last year.
In that sense, we've now moved into our what we call the value capture or monetization and validation stage, where we're looking for external parties to bring in additional assets to actually help us accelerate and grow our business. We move on to page three. Very quickly now, what is Mitsui investing in? Mitsui is investing in Axiata Digital. There are three main components within that. Boost, for those of you who are based out of Malaysia, hopefully this is not an alien name to you. It is the largest e-wallet in Malaysia, focused on micro payments for sure. QR payments, bill payments, that sort of stuff. Within our financial services portfolio, we've also launched micro-lending. This is an AI-based credit scoring engine that actually powers our lending business. Microloans, for instance, in Malaysia, typical loan size of about MYR 3,500.
Micro-insurance, where again, we've just launched this business in November of last year, very quickly ramped up to almost 50,000 policies that we've actually dished out so far. ADA, which actually used to stand for Axiata Digital Advertising and now stands for analytics, data, and advertising, has very quickly become the largest independent digital agency in Southeast Asia. We have something like 1,500 clients, some major names around this region. Three components to the business, an agency practice, a media integration business. Something that's actually quite unique to us is the technology business, where we actually leverage a whole host of data that we have, which I'll talk about in a second, to actually help our clients target customers. Finally, Apigate. This is turning into a global API marketplace. Again, three components of that business.
We actually built the platform and install the platform through our apigate AXP business. We allow for the monetization of that platform through the apigate Mint business, and then apigate Go, basically a short tail marketplace to actually help startups connect to assets within a telco. Again, I'll explain a little bit more about how this sort of works. If you jump onto the next section, this is now talking about Boost. Maybe we'll just go straight to page five. Boost, for those of us in Malaysia, you'll recognize this as a wallet. It is the largest e-wallet right now. We have, as of last Friday, crossed 4 million users. They're very active. Obviously, the use cases we have are on the right-hand side, so these will be the common use cases for most wallets that you see in the region anyway.
Mobile phone top-ups, utility bill payments, a gamification component, obviously online and offline products and services that you can actually pay with your Boost wallet via QR codes, international remittance. Actually, what's very interesting is that this is, to us, a means to an end. The Boost wallet effectively becomes a virtual account for the very large unbanked or underserved segments of population in our markets, where we have since launched microinsurance, microlending businesses, and then very soon, microsavings and microwealth management. If you go on to page six, the trend for Boost GTV so far, phenomenal growth. We actually started this business back in January of 2017. Already for the whole year 2017, we saw some fantastic growth. 2018 was when we saw some major inflections. As at end April 2019, as I said before, 4 million users.
This represents 5.4 x year-on-year growth relative to 2018. 80,000 merchants in our footprint right now, so we are the largest as well. 21x growth year-on-year relative to 2018. The one that gets us very excited is that we saw 32 x growth in our transaction value. This is basically gross revenue, if you like, the value that we transact on our platform. Within our active user base, 5.7x growth for GTV per user. All in all, very exciting growth for Boost as a wallet. If you move on to the next page seven, Boost has also been launched in Indonesia. In Indonesia, we are actually much more focused on the merchant side of the equation. It is a merchant-centric business that we've launched, if you like, almost like a merchant wallet as opposed to a consumer wallet.
We've built a very large base of almost half a million merchant touch points. Through that, we have merchant solutions such as allowing merchants to pay their suppliers, allowing merchants to do B2B payments, including bill payments, and obviously some microlending for the merchants itself. That's Boost in short. Moving on to page eight. This is our lending and our insurance business. Lending, as I said before, very small ticket sizes. Our working capital loan product in Malaysia, for example, it ranges from about MYR 500 to MYR 20,000. Our average ticket is right now MYR 3,500. We've actually dished out a very small number of loans so far because we were trying to scale up this business very soon. Our engine is working very well, so we have had zero NPLs to date.
Likewise, our Indonesia supply chain financing business average about $300 each loan size. We've dished out 1,100 loans to date, again, because of the robustness of the credit scoring engine, the NPLs are still zero. Finally, the invoice financing business, average ticket size of about MYR 6,000, 2,400 loans to date, also zero NPLs. That's on the microlending side. We're looking to really amp this up by almost 100 times within the next few months, because now that we've tested our engine and we feel that it's very strong and very robust, we feel very confident of taking it to the next level. On microinsurance, again, just as I said before, very early stage. Personal accident cover for consumers as well as merchants in Malaysia and in Indonesia.
If you add all of that together, that works out to be about 50,000 policies that we've dished out. Again, we've only launched this business back in November of last year. We are also looking to amp this up by about 100x within 2019, 2020. That's the financial services side. Moving on to the next section, page nine onwards. Maybe we'll jump to page 10. This is ADA. ADA is our digital advertising business. Three practices in short. One is an agency practice. This is where we basically build creatives or advertisements, if you like, for our clients. We do that in a very different way. We actually use an artificial intelligence, a machine learning robot, to actually create the ads for us.
Actually, those ads typically take three days from the discussion of the brief to actually being rolled out into YouTube or into Facebook, into Google. Because it's only three days, the cost to a customer is very cheap. We're basically disrupting the economics of digital advertisers around the region. Obviously, the middle bucket, we have a media integration business, where we're plugged into Facebook, to Google, to telco players, as well as the AVOD players like HOOQ, Netflix, iflix, and the likes. The most important part of this equation is actually our technology component, where we actually use data to help advertisers. We're no longer going with a traditional business model of cost per insertion, cost per action, and so on and so forth.
We basically have a revenue model where we might go to a credit card company and say, "For every single credit card user that we bring to you pay us $50." Right? That equation works very well for us. We take all the media risk, but if our engines are correct, if our data science is correct, we actually make good money out of each one of those. The key within that is that we have 280 million unique profiles, meaning that we actually know 280 million users within our region pretty well. We have 200+ attributes of those users. If you go on to the next page 11, you'll see that like all advertising agencies, very focused on a few verticals, telco being obviously our original pedigree.
We also noticed that financial services is something that, because it's a high LTV, lifetime value, for the client, they are actually willing to spend on the acquisition part of it. Page 12 is just a quick glance of the performance of ADA today. I'll just focus on kind of the two bottom left-hand corner text. By year-end for 2018, we were in nine countries. We have already integrated the agency business, the analytics business with the outcomes business. If you look at our top-line growth, we saw media spend grew by two times, our net revenue grew by 2.3x, and our agency practice grew by 130%. I think we've given guidance that actually this is the first company that we have in our portfolio that will be PAT positive. We're looking at it turning PAT positive by full year 2019.
Some of the clients, just a quick kind of shout-out. Some of the clients on the right-hand side you'll see include brand names like DBS. Obviously, we work with our telco partners like Celcom, but we're also agency on record for Watsons, for Samsung and some of the big clients in this region. The final company, Apigate. This is probably the most complicated. If you're not familiar with application programming interface, APIs, then it may be a little bit more challenging for me to describe it. If you go to page 14, what it is if you mention content companies like Tencent Video, gaming companies like Steam, CMG and the likes, they have difficulty accessing customers in our footprint. Actually, a good conduit for them are actually the telcos. Obviously the telcos are sitting on top of a very large customer base.
Unfortunately, the way that the industry has developed is that there have been a lot of very fragmented players across the space, including the likes of Twilio, which is a very successful public-listed company in this space. There's no single player that actually helps with the connection between the mobile network operators and, of course, the customers that sit below them with the gaming companies on top. Apigate actually came up with three products. One is, of course, the platform. The platform that cuts across all the bit in the middle. A monetization model that allows the likes of Tencent games, allows the likes of Facebook or Google and Apple to kind of very quickly plug in and then get access to the assets within the mobile network operators. If you turn to page 15, you will see this at work.
Apigate being the intermediate layer. The little icons in the middle, these are all the different product sets that we have. We will help the clients with a targeted acquisition. We'll help the companies with authentication and even fraud detection. Obviously, we'll help the companies with monetization, because a vast majority of the markets that we serve don't have credit cards. If you don't have credit cards, it's very hard for the gaming companies to be selling tokens or spears or guns or whatever to their users in the network. We're providing a method for monetization for them. The thing to kind of note within Apigate is that this is a platform that is now connected to 110 telcos around the world. Middle East, Africa, Latin America, South Asia, Southeast Asia.
If you add the 110 MNOs, the subscriber base of the 110 MNOs is now reaching over 3.5 billion mobile users. From that base, the likes of all these northbound companies or gaming companies, content companies like the Tencents of the world, are finding ways to sort of connect with us because we give them access to the larger customer base that we have access to. Very quickly, the next page 16, a quick highlight on the 2018 performance for Apigate. You'll see that from a business perspective, the business has grown. Gross transaction value grew 3.3x, net revenue grew 4.8x. The partnership base has definitely grown as well. We right now serve about 250, what we call large long-tail partners. This would be the Steams, the Twitters, the Gameloft, the Facebooks of the world.
You'll see some very big brand names down there, Netflix, ITG and whatnot. What's actually something that we're starting to focus on is actually the long-tail base as well. These are very small startups that you'll see littered across our portfolio, littered across our footprint, that want to get access to the markets around the world. That's Apigate performance in summary. Let me now move to what we announced today. Page 17. Actually, maybe we'll jump to page 18. We received an offer from an investment from Mitsui & Co. with the following terms. We've now agreed to that, and we've signed on that. The key terms is that it basically establishes a pre-money valuation and enterprise value of the three companies within the Axiata Digital Services portfolio, i.e. ADA, Boost, and Apigate. We established a pre-money valuation of $500 million.
This is a strategic minority stake for them. We will be using those funds for essentially operating expenditure within those three companies, but also to look very opportunistically at some potential M&As that we might want to do within each one of these three companies to actually bolt on and grow and accelerate the growth of the business. Mitsui obviously is a partner that we brought on board because they were able to bring quite a lot of strategic partnerships that they have through their subsidiaries, through their investments in digital business to actually help us grow. Even before the deal was completed, some of those synergies were already starting to come through the businesses that we have. That's the Mitsui deal. Happy to take more questions around that. Before we end, maybe just to highlight the other thing that we announced earlier this week.
This was the set of assets, five in total, which includes 11street, our e-commerce company in Malaysia, BIMA, a Swedish micro-insurance company that's actually present in Africa, in some of our markets as well. StoreKing, which is based out of India. These five assets were essentially assets that we didn't have operating control over. We had minority stakes in them. As part of this move to invite strategic investors at the ADS level, we basically carved these out and actually transferred this to a fund manager. The fund manager is Pegasus 7 Ventures. It's part of the Gordian Capital Fund Management Group. The transfer value for these assets is MYR 140 million in equity value.
As I said before, we now have a carry interest structure with Pegasus 7, if there are any exits within these assets, we will then be able to capture 85% of the profit from the transfer. That's in summary, the two big news items that we announced this week, including the signing ceremony with Mitsui this morning. Happy to take any questions. Maybe I'll hand it over to the emcee to coordinate the questions.
We will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key, followed by the digit two. Your first question comes from Wei Shi Wu from Citibank. Please ask your question.
Hi, this is Wei Shi from BNP Paribas. I have three questions. Firstly, can you let us know how much, or what was the stake that was sold to Mitsui? Secondly, can you bring us through the thought process behind the selection of Mitsui for this investment? Were there other partners, for instance, that you considered? In view of Mitsui's very diverse business interests, can you talk us through exactly where and what value you see Mitsui as bringing to the table? The third question is with regard to the non-core assets that are now parked under the external fund manager. What are the specific plans for these assets and any associated timelines for these? Thank you.
Let me start first on Mitsui, then before I pass to Khairil. To give you a full picture, about two years ago, Mitsui and us have been talking about, from a strategic partner with Axiata as a group, very strategic perspective, because they wanted to invest in some of our operations, in some of the operating companies and ADS and few others. They believed in us. They believe that we are a very good company. I guess so. They wanted to invest in us. What we did is to allow them to invest in Cambodia first for the first 10%, just to get-to-know-you basis. They're very happy with the investment, and they followed by additional 10% of Smart in Cambodia. That time, obviously, they were looking at other operations, and that includes ADS.
This is like the third investment in Axiata or in other company. Of course, the view that to broaden their relationship with us. That's a much bigger perspective. When they invested in Smart, at one point, very hard for me to explain totally that it is a first of many steps. Some people were asking, actually, why Smart? I could explain only to some extent because I was not given the liberty to explain the whole plan by Mitsui. Now it is pretty clear, which I can now talk about, that that is their plan. Smart was actually a first step towards a much bigger relationship with us. This is the third step.
Maybe if I can just add on to that, Tan Sri. I think the original ambition, at least within Axiata Digital, was that we were actually going to look at fundraising at the individual operating units. Meaning to say that at some stage we will be fundraising for Boost. We had closed a fundraising round, very successfully closed a fundraising round for ADA in 2018. We were going to start looking at fundraise for Boost and fundraising for Apigate. There were some discussions that, in fact, there have been discussions we have had with several parties on fundraising. I think Mitsui, both through the connection that came from Axiata, from their relationship with Axiata and their previous investment at Smart, were sort of willing to take an investment at the ADS, if you like, ADS whole-core level.
That kind of gave us a little bit of sort of a breathing room from the individual fundraising that we were planning to do on Boost and planning to do on Apigate. Having said that, we did take almost kind of a year in courtship, because we really needed to understand the strategic value-add that they will bring. We looked at their digital investments across the region. We looked at actually their non-digital investments as well, which could potentially be some of the partners that we would want to have in our financial services business, right? Including auto manufacturing, where we potentially could be helping them with some of the distribution of the parts and some of the financial services around the distribution of the parts.
Those were some of the things that we actually dived deep into, in our, if you like, reverse due diligence of Mitsui as a party. With regards to question number three, non-core assets parked under the fund manager. There are plans that we will probably fully exit from these businesses within a three-year timeframe. These are not new businesses anymore, right? I mean, if you like, 11street was actually founded in 2015, so it has been around for a long time now. Actually within three years, that would take us up to 2021. That's a six-year timeframe for startup investments. At that stage, we will probably be looking at a full exit from these businesses. We will obviously sort of play it to a little bit sort of the environment at that stage. But for now, the fund is set up for a life of about three years.
Weishu, Vivek Sood here. I'll just add on to what Tan Sri and Khairil said. I think this is quite in line with our strategy of shifting gear, where we said that we will cap our exposures in digital ventures and digital businesses. That's one of the thinking around the carving of the digital ventures on the first stage, and also getting investments coming in from Mitsui into the digital ADS, these key core businesses.
Sorry, I just realized we now didn't see your question number one. Unfortunately, we're not at liberty to disclose how much their investment is, but all I can say is that when all is said and done, after the full investment from Mitsui, they will hold close to 10% stake at ADS.
Thank you very much. Appreciate your comments.
Thank you.
Thank you. Your next question comes from Arthur Pineda from Citibank. Please go ahead.
Hi. Thanks for the opportunity. Several questions. First, given these transactions, are there any changes to the loss guidance or the investment budgets for the year on the ADS side? Second question I had is with regard to any gains that you will be booking as a result of the asset transfer and the buy-in from Mitsui. Is there something that you will be booking on this, and does that figure into your dividend discussion? Third question I had is with regard to the structure. Can you help us understand why you're going into a preferred share structure with Pegasus rather than units in the fund itself? Thank you.
Do you want to take it, Jamal?
Yeah. I'll take the first one and then we can decide how to split the others.
Okay.
First one, I think clearly we have guided last year that we will cap our investments in digital businesses to the extent of $50 billion. This is one of the activities to keep the funding into those businesses up to that level.
Question number two. I think on the Mitsui transaction itself, there will not be, what do you call it? Any realization of value, booking of profit. However, in the transfer of assets to Pegasus
On the second one, let me just I think, first of all, this is not a very significant transaction that has an impact on overall dividend from our perspective. Second thing is, this is money coming in, and money coming in does not change any status of the company because we still own a majority of this company, so there's no profit booking as such on the Mitsui transaction, right? Now on the last one, I think on the Pegasus, I think we decided to go for a preference share option for a simple reason that the timelines for us to monetize this is not decided very firm. It will take three, four years. The objective is not to have future funding into this business. Our objective is not to have any control over the running of this business.
We are just pure investors into this business, but we expect these businesses to, over time, evolve and generate further value for us to be able to monetize it.
Profit implication.
Profit implication on account of Pegasus, we will have a one-time profit as we transfer from our books into the fund. That one-time profit, we will be disclosing when we report our quarter 1 numbers later in the month. Subsequent to that, since there is no equity stake, there's no influence which we exercise, we would be like any investor into the fund, which means we will only have any movement on the value of this fund. We'd only go to the balance sheet, it will not come and hit our profit and loss account.
Understood. Okay, thank you very much.
Thank you.
Thank you. Your next question comes from Foong Choong Chen from CIMB. Please go ahead.
Hi. Thanks for the call. Two questions from me. Firstly, on the deal with Pegasus, just wanted to clarify and confirm that Axiata will be receiving $140 million in cash proceeds from Pegasus. Is that correct? In terms of the losses from the companies under Axiata Digital Ventures, could you remind us what was that number for 2018? Am I right to say that going forward after this sale, we will not account for those losses in the future? That's the first question. Second question on the ADS deal with Mitsui. Can you give us an idea of the outlook for earnings for the ADS companies into the next few years? You mentioned ADA will be positive in 2019. How about Boost and also Apigate?
Does the entry of Mitsui help accelerate the scaling up of the businesses and maybe bring ADS towards breakeven or even profitability sooner than previously? Yep. Those are my two questions. Thank you.
Okay. Deal with Pegasus. We as total ADS business, last year we had around MYR 300 million is what was the total expenditure for us, P&L. This year we are talking about a $50 million, which is around MYR 200 million. That's the kind of numbers we are looking at from a funding perspective into the digital businesses, which includes the three core businesses as well as the ventures.
Question one. The answer is no.
No. As said earlier, we will get preference shares. We will not get cash at this point in time. Only when the investment funds will monetize and get cash from subsequent sale, that we will be getting cash and redeeming our preference shares.
Maybe I'll take question three in terms of the deal with the three companies. I think the guidance that we've provided so far is that ADA will be profitable, PAT positive by 2019. For 2019 full year, ADA will be PAT positive. By 2020, both ADA and Apigate will be PAT positive. Obviously the big one, Boost will be PAT positive by 2021. Given the size of Boost, ADS as a whole will be PAT positive by 2021 and not before that.
The only caveat for Boost is that the more successful it is, the more we might have to invest, and it might delay further. That's the only caveat. Now also, let me put it this way. Assuming it's so much more successful than we ever thought, we might invest more, and it might drag for a year also.
Yeah.
That's the funny thing about these investments. Generally, we're trying to target for all to be positive, at least PAT neutral by end of 2021. That's the target.
Okay. Just two follow-up questions. One for Vivek on the MYR 300 million expenditure book for ADS in 2018. What was it specifically for Axiata Digital Ventures itself? I think, is it right to say that going forward you will not be booking in any more share of losses from Axiata Digital Ventures? I just want to find out what that amount was in terms of losses last year. Also, maybe for Tan Sri on the Axiata Digital Services. For ADA and Apigate, since they're going to breakeven or even be PAT positive in 2019, 2020, should we expect that these assets could also be spun off in terms of an IPO maybe within next two to three years?
Okay. What do you answer?
Yeah. Digital Ventures was around close to MYR 40 million.
On the question of IPO, Vivek.
He had a second part of the question which was, are we going to see any more drag from the Axiata Digital Ventures?
Axiata Digital Ventures, all of them have been now bundled, moved into the fund. As I said earlier. We will have one-time gain based on what's the value, MYR 140 million, versus what's our carrying value, which we will disclose in quarter one. Beyond that, any investments, we don't plan to put any further money into these businesses. Given that we would have actually taken out of our P&L impact. Any impact in future will be into the balance sheet, so it will not come into the P&L, going forward.
On question five, let me give you the two side of it. Currently, there's no plan to spin off. Obviously there is an advantage of doing so because at this point in time, the whole of ADS, the three companies, which have been valued by a third company who put money into the company, to be valued at MYR 500 million. From a SOTP perspective, it's practically zero today in practically most of the value given by our shareholders and our analysts. That's the frustration. On the other hand, if we spin off, we might definitely eliminate the value even beyond $500 million. The disadvantage is that there's a lot of synergy between those companies and our core mobile companies in terms of analytics, in terms of the asset we have, billing assets, and many others.
We are not thinking of it right now, but we won't rule it out in the future.
Okay, got it. Thank you so much.
Okay. Thank you.
Thank you.
Your next question comes from Alex Goh from AmBank. Please ask your question.
Thanks, Tan Sri. I've got a few questions. The first is, at the moment for ADS, what is the net debt level currently? I just want to find out what's the equity value after you knock off against your enterprise value. That's my first question. I noticed your announcement mentioned that there's 30 brands, but you're going to spin off three to ADS and the other five is going to Pegasus Ventures. What about the other brands? Where are you going to park them under? That's my second question. My third question, it's regarding your stake in ADS. I just want to confirm that Mitsui stake will only be 10% and it's going to inject only the equity portion or later, how would the actual funding for future CapEx be financed?
Let me answer number two first, then the rest can answer number one and three. Let me step back again. Let me put you into context. When we started this a couple of years ago, either organically and inorganically, we built 30 brands. There are four components to what happened to those brands. 11 of them, we moved back to the OpCos because they're so tied to OpCos. Three of them-
Shut down.
Sorry. We shut down about 12, 10, 12 of them. Either shut down or we sold them. Then three became the new ADS that Mitsui bought into, and five we moved into the digital venture. There are four categories. 11 moved to OpCos, three the new ADS that we talk about today, and five the digital ventures. Let me just complete information. The investment of $500 million is attributed to the new ADS and the valuation of $140 million is attributed to the five digital venture companies. Together it's $640 million. Our investment for all the 30 brands was $244 million. I hope you got it. I guess that answers your question, I hope.
Yeah. You invested $244 million of your own cash, did you raise any debt into this ADS besides the $244 million?
The entire investment was in the form of equity from Axiata Group Berhad. There is actually some cash there. It's actually around $20 million of cash there. You would look at equity value as $500 plus $20.
Question number three, the answer is it's equity only. Your question around the Mitsui stake, whether there will be debt funding of any kind, no, it's equity funding. For now it's up to 10%, but in future, just like what we saw in Smart, they probably are not shy to doing further investments into ADS.
On 5G.
Can I follow up with one other question? What percentage would Gordian Capital have in Pegasus 7?
Gordian Capital is the fund management company. I guess Pegasus is effectively the sidecar fund. Pegasus is the fund itself. Technically speaking, Gordian Capital will have the ordinary shares within that. We will have the preference shares within that. Y ou can almost think of Gordian Capital and Pegasus one and the same.
I see. Okay. Axiata would have how many percentage within the Pegasus Ventures? I mean, the asset that holds the five assets.
We will only have preference shares.
Yes.
We will not have any equity investment in the fund. It will be only preference shares.
I see.
Maybe you can explain.
Gordian Capital will only.
Say that again, Alex?
Yeah. Gordian Capital will only get 15% from the profit sharing, right? From these five assets. Am I right?
The carry at the time of monetization.
Correct. There is a management fee. It's 1%. It's charged and funded by the fund.
Okay. I remember hearing mentioned earlier something about 15% sharing that Gordian Capital will get. Did I hear correctly?
Yeah. If you imagine a carry interest structure, right? Upon exit of the asset, for instance, if there is a delta, a profit upside of 100 million, Pegasus 7 will keep 15 million of that. We will get to book 85 million of that profit, right? That's the carry interest structure. It's a very common structure used by private equity fund and venture capital, right?
Just to simplify, we will transfer that 140 million. Let's say after four years, he sells at 200 million. The profit which is generated-
is MYR 16 million.
16% is the carrying for him, and the balance would be given along with the MYR 140 million back to us.
I see. Okay. Thank you so much.
Thank you.
Once again, if you would like to ask a question, please press star one on your telephone. Your next question comes from Ranjan Sharma from JPMorgan . Please go ahead.
Hi, thank you for the call, and congratulations on the deal. A couple of questions from my side. Firstly, the $500 million valuation that you've talked about, does that also include the $140 million preferred shares in the Digital Ventures? Secondly, what will be your next funding requirements to scale these businesses? Thinking out loud, mobile payment seems to be a very competitive business. You have probably 30 to 40 wallets in every country in Southeast Asia, and Grab just completed a $5 billion-$6 billion fund raise, and payment seems to be a big focus for them as well, it seems. How do you compete with some of the other players in the market without raising far more capital than you have raised so far? Thank you.
Let me take both questions. First question, the $500 million valuation does not include the $140. The $140 is separate. That's why, as Tan Sri Jamal said earlier, in total, it establishes a valuation, a pre-money valuation of $500 plus $140 million, so a total of $640 million for the assets that are in play in this discussion today. Question number two, the next round of funding is actually going to come in the form of the individual companies, right? Our next plan will be to actually raise capital for the individual units. As I said before, there are already conversations going on, both at the Apigate and the ADA level, to raise potential funds. Obviously, we are very aware of some very well-funded players in this space.
Our understanding is a big chunk of that fund is actually going into very large markets that they participate in, like Indonesia, like Thailand. Having said that, though, we are actively also looking out for funding within Boost as well. Just to summarize, though, that there are active conversations going on for the next round of funding. Certainly the amount of investment committed by Mitsui as well as Axiata to date, that will take us well into 2019 and beyond.
Okay. Thank you so much.
Our next question comes from Arthur Pineda from Citi. Please ask your question.
Hi, thanks. Just a follow-up question. If there are funding needs required for the assets that you've transferred to Pegasus 7 Fund, how will that be met going forward? Does Axiata have to put in more money, or is that all going to be done on the local level?
It is the responsibility of the fund manager to raise additional capital should any of the five portfolio companies require additional funding, right? Just like any fund manager, they will be raising funds on their own to supply for these companies.
Is that dilutive?
Again, ours is a preference share, it is not, how should I say? It is not a reflection of our equity value in the asset. The agreement of the exit value, obviously, will have to reflect the value of the asset that we are injecting in. In short, yes, there is a potential dilution impact on money that they will additionally pump in. That will be accounted for before they look into the net profit from the asset that we injected in. Just to be sure, whatever it is, good plus or minuses, we will have no impact on our P&L.
No impact on our P&L.
From the day we finalize which was January.
Yeah. Understood. Thank you.
Your next question. Oh, we have no further questions. At this time, we now pass the call back to the speakers. Please continue.
Okay. Thank you very much for joining us in today's conference call. I really appreciate all the questions, and have a good weekend. Thank you.
Thank you very much.
Thank you.
This concludes today's call. Thank you for your participation. You may now disconnect.