Swedish private equity firm EQT partners has mandated JPMorgan and Deutsche Bank as it prepares to exit number three German cableco Kabel BW, reports Reuters.
Sources cited by the newswire said that the process was still at an early stage, with a sale or…
Swedish private equity firm EQT partners has mandated JPMorgan and Deutsche Bank as it prepares to exit number three German cableco Kabel BW, reports Reuters.
Sources cited by the newswire said that the process was still at an early stage, with a sale or IPO possible by Q2 2011.
Spokespeople for JPMorgan and Deutsche Bank were not available for comment by press time.
EQT has owned Kabel BW since 2006, having paid previous owner Blackstone a reported E1.3bn for the asset. The company now reportedly boasts 2.2-2.3 million subscribers and reaped E493m in sales last year. Earlier this year, it bought assets attached to 50,000 customers in the Baden-Wurttemberg region from troubled rival TeleColumbus for an undisclosed sum.
Many private equity firms are soon expected to exit their European cable assets, as the investment horizon is now reaching an end. In an ideal world, these exits would be via IPOs, but the likelihood is instead a series of secondary buyouts, which would see the firms mix and match the assets they currently own amongst themselves.
If EQT were to opt for M&A, its options are likely to be limited.
The country’s number one cableco, KDG has already been told by the German federal cartel office that it cannot merge with KabelBW or number two player Unitymedia on competition grounds. KDG’s private equity owner, Providence, reduced its shareholding from 60% to 45% in late September, when it placed 15 million shares to institutional investors.
In an interview earlier this year, Kabel BW CEO Harald Roesch touted a possible tie-up with number two player Unitymedia, whose owner Liberty Global has spoken publicly of its admiration of Kabel BW and interest in exploring partnership options.
That said, it remains unclear whether the cartel office would allow such a deal.
Roesch also named Vodafone and Telefonica as potential buyers for Kabel BW, from which they could extract “simple synergies”.
Dealmakers have for some time been waiting for larger convergence deals among the German market’s ISPs, cablecos and telcos as European operators look to in-country consolidation as a means to broaden their existing footprints.
But it is also possible – if not likely – that Kabel BW will instead end up in the hands of another private equity owner.
According to one local cable executive, “It is possible that [Liberty Global chairman John] Malone might not buy Kabel BW because of regulatory issues and differing infrastructure, so I think that a secondary buyout is far more likely”.
