US private equity firm PAR Capital Management has moved closer to taking control of Row 44 after the in-flight broadband provider raised US$45m in a private financing round.
SatelliteFinance understands that the PAR effectively financed the entirety of…
US private equity firm PAR Capital Management has moved closer to taking control of Row 44 after the in-flight broadband provider raised US$45m in a private financing round.
SatelliteFinance understands that the PAR effectively financed the entirety of the funding and then gave a portion of its stake to Germany-based in-flight entertainment solutions provider Advanced Inflight Alliance AG (AIA) as part of a wider transaction between the two.
Under the terms of that deal, AIA issued 5,255,170 new shares at €1 per share in a capital increase in kind to PAR Investment Partners, a subsidiary of PAR Capital Management. In return, PAR contributed 84,695,034 shares of Row 44, representing 12.5% of the company and valued at approximately US$25m.
The transaction meant that PAR increased its holding in AIA from around 29% to around 47% and with it triggered an obligation under Deutsche Borse rules to launch a public tender offer. To that end, PAR is offering AIA’s other shareholders €4.50 per share. Just under 50% of the German company is held in free float with institutional investors including AXXION S.A., BF Ventures Management and BNY Mellon holding the remainder.
The tender offer is likely to last around thirty days and close in early July.
Speaking to SatelliteFinance, AIA chief executive Louis Bélanger-Martin said that acquisition of a minority stake in Row 44 was a key strategic move as it will enable the company to address a much larger market.
Among Row 44’s customers is Southwest Airlines, one of the largest carriers in the US, while it recently signed deals with Icelandair, South Africa’s Mango Airlines and Transaero, Russia’s first private airline. The company stated that it would use a portion of the US$45m financing to expand its global infrastructure to support new European and Trans-Asia airline customers
Row 44 would not disclose the size of PAR’s holding in the company post-transaction but it is believed to be close to a majority stake. PAR has participated in all of Row 44’s institutional funding rounds that have raised a total of US$100m since its inception in 2004.
If the private equity firm is successful in it tender offer for AIA, this would indirectly give it the latter’s 12.5% stake and effective control of both companies.
In regard to whether this could lead to a potential merger of AIA and Row 44, Bélanger-Martin said that this was not on the table at the moment.
He also pointed out that the deal with Row 44 was not mutually exclusive and that AIA’s in-flight content platform could still be offered by in-flight broadband peers such as Gogo and Panasonic Avionics.
To that end, AIA is currently undertaking a rights issue of up to €2m that will be used to help finance future acquisitions. Bélanger-Martin said the company had already identified some targets.
