(Bloomberg) — Inmarsat’s private equity owners are considering an exit from their investment in the U.K. satellite communications group, according to people familiar with the matter.
Apax Partners and Warburg Pincus have held early discussions about a possible sale of the business after receiving approaches from potential suitors, the people said, asking not to be identified discussing confidential information.
An exit from Inmarsat would mark a quick turnaround for its owners, which took the company private in 2019. The private equity firms teamed up with Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board on the $3.4 billion deal.
Well-funded upstarts are redrawing the satellite industry’s economics by launching thousands of spacecraft to beam broadband from low-Earth orbit. The sector is seen as ripe for dealmaking, but corporate rivalries and political sensitivities have tended to obstruct potential mergers in the industry. In September, France’s Eutelsat Communications (EPA:ETL) rejected a $3.2 billion takeover bid from billionaire Patrick Drahi.
Inmarsat’s backers could also consider a listing, the people said. Deliberations are ongoing, and there’s no certainty they will lead to a transaction, according to the people.
Representatives for Apax, CPPIB, Inmarsat and Ontario Teachers declined to comment, while a spokesperson for Warburg Pincus didn’t provide comment.
Inmarsat CEO Rajeev Suri has been hiring new executives and working to launch a new network using similar technology to billionaire Elon Musk’s StarLink. The company is in the “sweet spot” as the satellite industry consolidates and “is likely to have many interested dance partners,” he said in a July interview.
Suri has experience of telecommunications consolidation, having bought Alcatel-Lucent in his previous role leading Nokia Oyj (NYSE:NOK). Billionaire Charlie Ergen’s EchoStar Corp. (NASDAQ:SATS) made a bid for Inmarsat in 2018, and Eutelsat has also considered buying it in the past.
Inmarsat received $700 million of delayed payments last year for airwaves it had leased to another company, with future payments expected, potentially making it easier for its private equity owners to make a return on the $3.4 billion buyout price.
The company has 14 satellites orbiting the earth that are used by companies and governments for communicating across land, sea and air, according to its website. Inmarsat plans to launch another seven by 2024, the website shows.
Should Inmarsat’s owners decide to pursue an initial public offering instead of a sale, it would mark the second time Apax has brought the company to market. It was part of a consortium of investors that bought Inmarsat in 2003 and took it public two years later.