Private equity firm TA Associates has acquired Hong Kong-based AsiaSat’s wholly owned SpeedCast satellite broadband unit for US$32.24m.
TA Associates will pay US$25.1m of this consideration immediately, with the rest being paid in stages through…
Private equity firm TA Associates has acquired Hong Kong-based AsiaSat’s wholly owned SpeedCast satellite broadband unit for US$32.24m.
TA Associates will pay US$25.1m of this consideration immediately, with the rest being paid in stages through unsecured promissory notes that will be issued in a month, stated AsiaSat in a stock exchange filing.
According to the operator, which covers two-thirds of the world’s population with its four satellites, it is set to record a gain of around HK$135.68m (US$17.5m) from disposing the non-core asset.
William Wade, AsiaSat’s CEO, said: “We believe the disposal of this non-core asset will benefit SpeedCast’s long term growth while offering an attractive opportunity for AsiaSat to realise its investment in this successful business. The proceeds from the disposal will serve as general funds for further growth of our core business.”
AsiaSat has been a shareholder of SpeedCast since its inception in 1999. Since then, SpeedCast has been using AsiaSat’s capacity to provide satellite-based broadband services. The broadband provider currently offers managed network services in more than 30 countries throughout Asia, the Middle East and Africa, and AsiaSat said it planned to remain a significant supplier of its capacity after the transaction. In addition, AsiaSat has agreed to not directly or indirectly invest in a business that competes, or is substantially similar to, SpeedCast for five years.
SpeedCast reported around HK$25m (US$3.22m) in 2011 net profit, compared with nearly US$23m (US$2.97m) for the corresponding period in 2010.
In an email to SatelliteFinance, Wade said the company had now disposed all of its non-core assets.
“We have completed the disposal of our non-core assets and will focus our efforts on further growing our core business of satellite capacity leasing,” he said.
Wade added that the company’s growth strategy included exploring all opportunities for the acquisition of Asian satellite assets.
For TA Associates, the firm sees SpeedCast as a profitable and rapidly growing company, which fits ideally into its investment profile.
Michael Berk, a managing director at TA Associates who will be joining the broadband provider’s board, said he sees a number of factors driving positive growth for the group.
“Compared with Western markets, there is ample room for overall broadband penetration in SpeedCast’s operating regions, and wire-based broadband access is not yet economically viable in the remote locations and archipelagos common in many Asian countries,” said Berk.
“In the maritime market, the shipping industry increasingly sees the need for broadband at sea to manage functions remotely, comply with data and communication requirements in the context of security, and as a tool for recruiting and retaining younger staff.”
The SpeedCast transaction marks TA’s eighth investment in Asia, following five deals in India and two in China. These have spanned industries ranging from telecoms to mining.
AsiaSat and SpeedCast were financially advised by Moelis, and hired Paul Weiss for legal advice.
Goodwin Procter provided legal counsel to TA Associates on the deal.
