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MBK Partners, a private equity fund set up last year by Carlyle Group’s former chief in Asia, is among eight groups that have submitted bids for Taiwan’s leading cable TV operator, which has been put up for auction in a sale expected to fetch $1.4bn.
MBK is named after Michael B. Kim, who last year quit as president of Carlyle Asia to set up the firm with other former Carlyle employees. It closed a $1.6bn buyout fund last month.
The firm’s inclusion in the race to acquire China Network Systems is seen as significant because Mr Kim, a Korean-American, is regarded as having in-depth contacts and knowledge of the Taiwanese cable market.
He joined the board of Taiwan Broadband Communications after Carlyle acquired the company in 1999.
However, MBK faces intense competition from rival private equity groups in the battle to acquire CNS. Other buy-out groups understood to have submitted first-round bids include KKR, CVC Asia Pacific, Carlyle, TPG Newbridge, Australia’s Macquarie Bank and the private equity arm of Goldman Sachs.
The auction is being handled by Morgan Stanley, which declined to comment.
The level of interest underscores continued global interest in the industry, following two other large deals involving Taiwanese cable companies in the past month.
CNS has attracted intense interest because of its strong cash flow and growth potential. It holds 26 per cent of the market, or 1.14m households.
Carlyle last year sold Taiwan Broadband to Macquarie for $890m and this year re-entered the market by acquiring a controlling stake in Eastern Multimedia for about $1bn. Market share is regulated in Taiwan.
One person with knowledge of the sale process said CNS was expected to allow about six groups to conduct detailed due diligence for a month, after which potential buyers would have to submit binding bids. The person added: “This is going to be an interesting deal, not least because of Michael Kim’s involvement. The vendor is expecting a very high valuation, which it will probably achieve if so many buy-out firms are fighting for control of the company.”
The Koos Group, one of Taiwan’s largest conglomerates, owns 80 per cent of CNS. The rest is controlled by Star Group.
Analysts believe Taiwan’s cable TV market is ripe for consolidation.
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