Private equity fund Permira has closed its third Asian investment, backing a management buyout of Asia Broadcast Satellite (ABS) for an estimated $200 million.
Permira will buy Kingsbridge, the holding company for ABS, from its current shareholders, which include private equity firm Citigroup Venture Capital (CVC) and distressed debt investor ADM Capital.
Permira did not disclose the price it will pay to become the majority shareholder of ABS or what percentage stake it will ultimately own. A source close to the deal said the transaction value was in excess of $200 million, and noted that the existing ABS management will hold a significant minority stake.
ABS supplies bandwidth connectivity to broadcasting and telecommunications companies and currently serves over 80 customers in around 30 countries. It has three satellites in orbit under the ABS brand and one that is co-branded with a third party. Through these, it covers 80% of the world’s population, targeting high-growth markets in Asia, Russia, Africa and the Middle East.
ABS was founded in 2006 by its current chief executive officer, Thomas Choi, and backed by private equity investments from Citigroup Venture Capital International Proprietary Investment Partnership and Citigroup Venture Capital International Co-Investment.
Permira did not use an adviser for this investment, while Citi ran an auction on behalf of CVC. When information memorandums were being circulated, Permira sought and obtained exclusivity on the deal and thereafter the deal was done on a negotiated basis between the principals, added the source.
At this stage Permira is funding the entire ABS acquisition with equity. ABS has two additional satellites in the pipeline and Permira intends to support ABS to develop these properties. “The Permira funds support ABS’s ambition to become a leading satellite operator in its target markets,” the private equity fund said in a written statement.
In 2003 Permira invested in Inmarsat, a provider of global mobile satellite communications services, and in 2005 in Intelsat, a provider of fixed satellite services worldwide. Permira has already profitably exited both investments. The firm is taking a long-term view on the ABS investment and will assist the management team in creating value out of the company, including helping to facilitate satellite acquisitions, if possible.
Permira opened shop in Asia in Tokyo in 2005 and set up a Hong Kong office in 2008. Both locations currently have five professionals. Permira closed its first investment in Asia in 2007, buying a 20% stake in Macau-based gaming group Galaxy Entertainment. Its second Asian investment was in Japan in 2008 when the financial sponsor bought agrochemicals firm Arysta LifeScience. Like its current investment, the Arysta deal was a private equity secondary sale that saw Olympus Capital sell its stake to Permira.
“The investing landscape in Asia has had some ups and downs, but Asia is very much a key part of our growth strategy and we are busy pursuing investment opportunities here,” Henry Chen, the head of Greater China for Permira, said in an interview with FinanceAsia after the deal was announced. “The ABS investment is Permira’s third investment globally year-to-date,” he said.