Private equity fund Kohlberg Kravis Roberts is to acquire a 27% stake in oil & gas industry communication services provider RigNet from its Nordic peer Cubera.
The agreement sees KKR acquire all of Cubera’s 4.75 millions shares to become RigNet’s…
Private equity fund Kohlberg Kravis Roberts is to acquire a 27% stake in oil & gas industry communication services provider RigNet from its Nordic peer Cubera.
The agreement sees KKR acquire all of Cubera’s 4.75 millions shares to become RigNet’s largest shareholder.
While financial details were not disclosed, based on Rignet’s share price of US$28.30 on the 19 August, the day before the deal was announced, KKR would have paid in the region of US$135m for the stake.
The acquisition saw a spike in RigNet’s share price, which jumped 19% in a day closing at an all time high of US$33.63 on 20 August.
Commenting on the investment, Johannes Huth, head of Europe at KKR, stated: “We are investing in a fast-growing global market leader that has created an attractive niche at the intersection of three of our core investment themes: energy, technology, and services. All three sectors exhibit structural growth well ahead of broader GDP trends. We are excited about this addition to our investment portfolio and we look forward to supporting RigNet’s growth strategy as a patient and constructive shareholder.”
As for Cubera, Jorgen Kjaernes, managing partner, said: “We see KKR as a very good partner for RigNet going forward. Cubera acquired the lead investor position as part of a secondary acquisition in July 2008 and the investment has proved to be successful for our investors. Since 2008, the company has more than doubled its revenues and further strengthened its strategic position.”
At the beginning of August, RigNet further expanded its position by signing a strategic partnership agreement with MSS operator Inmarsat. The deal sees RigNet buy the satellite operator’s retail energy operations for US$25m in cash as well as become a key Global Xpress distribution partner for the global energy sector. In addition, RigNet has agreed, under certain conditions, to a significant four-year pre-purchase of Global Xpress capacity.
In outlining the strategy behind its investment, KKR argued that it viewed managed remote communications solutions as a rapidly developing market, particularly in the energy sectors.
Mattia Caprioli, head of KKR’s services sector team in Europe, remarked: “We believe that the digitalization of upstream energy has only just begun. A prime example is the rapidly growing demand for broadband connectivity for oil and gas operations in remote and harsh environments. Today, the connection speed of deepwater drilling rigs is a fraction of the internet connection speed of a typical family home.
“As significantly more bandwidth capacity becomes available and more real-time information is shared between rigs and headquarters, drillers, operators and oil field services providers will be able to improve health and safety, drive operational efficiencies and boost crew morale.
“We expect RigNet’s mission-critical connectivity, integrated systems and innovative services to play a vital role in helping customers shape the digital oil field of the future. We share management’s goal to establish RigNet as a pre-eminent global services provider to the oil and gas industry.”
KKR has also recently formed a maritime finance company that will act as an asset-based lender focused on maritime assets in the offshore oil field services and traditional shipping sectors. The venture will initially be capitalized with US$580m of equity.
ABG Sundal Collier provided financial advice to KKR on the RigNet investment, with McKinsey & Company, Simpson Thacher & Bartlett and Schjodt providing legal advice. Cubera was advised by OAVIK Capital and Willkie, Farr & Gallagher.
