Permira, the UK private equity house, and the management of Asia Broadcast Satellite, a satellite operator, have acquired the company in a deal worth about $200m.
The buy-out marks Permira’s first investment in Asia since the financial crisis. The group entered the region in 2007 by investing $840m in Galaxy Entertainment, the Macao casino operator, at the top of the market.
In buying ABS, Permira is sticking to a sector in which it has considerable experience, having previously made lucrative investments in Inmarsat of the UK and Luxembourg-based Intelsat. The Inmarsat and Intelsat deals generated respectively four times and 10 times returns for Permira’s investors.
Founded in 2006, ABS is much smaller than either Inmarsat or Intelsat, but has plans to expand aggressively through strategic partnerships, acquisitions and by building its own satellites. The group has three satellites in orbit serving 80 customers in 30 countries across south-east Asia, the former Soviet republics, the Middle East and Africa.
Permira and ABS’s management are buying the company from Citi Venture Capital International, Asia Debt Management Capital, and other small shareholders, according to people familiar with the matter.
Permira will become the majority shareholder, although the group did not disclose the size of its stake.
The all equity deal means that Permira’s latest buy-out fund is more than 70 per cent invested, taking it closer to the 75 per cent threshold at which most private equity groups start raising their next fund.
Permira, which has about €1.7bn ($2.2bn) left to spend before its investment period expires on its latest fund in 2012, could find its next fundraising a challenge as several of its recent deals have underperformed and its biggest investor, SVG, is unlikely to reinvest in a new fund.
Permira’s first investment in Asia was in October 2007, when it paid HK$8.42 per share for a 20 per cent stake in Galaxy Entertainment, controlled by Hong Kong tycoon Lui Che-woo. On Monday its shares were trading at HK$6.53.
The Galaxy deal was a departure from Permira‘s traditional strategy in Europe of taking full control of companies through leveraged buy-outs.
Permira’s second Asian investment, in February 2008, was the $2.2bn acquisition of Arysta LifeScience, an agrochemicals business headquartered in Japan.
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