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BC Partners, the UK private equity firm, was on Monday close to announcing the purchase of Intelsat for about $16bn, including debt, after outbidding several strategic buyers in a heated auction for the Bermuda-based fleet of satellites.
BC’s victory in the auction shows buy-out groups continue to be aggressive buyers even as debt financing becomes more expensive on the back of a rise in Treasury yields.
BC edged out offers from other private equity groups as well as Loral, the New York-based satellite group, and a joint bid by Liberty Media and EchoStar Communications.
A deal would be BC’s largest acquisition outside Europe. While US private equity groups have expanded significantly in Europe and Asia in recent years, European buy-out groups have been slower to make investments in the US.
But Apax Partners and Permira Advisors – and now BC Partners – are showing an increasing willingness to clinch deals outside their home market. BC would pay about $5bn in equity and $11bn in assumed debt for Intelsat, people familiar with the matter said.
Intelsat has declined to comment on its sale process, which was launched several months ago. BC declined to comment.
Because BC is British and satellite operators are considered sensitive for national security purposes in the US, the planned acquisition of Intelsat will have to be reviewed by the Committee on Foreign Investment in the US, which vets foreign takeovers on national security grounds. It will also have to be approved by the Federal Communications Commission and the US Department of Justice.
People close to the deal say they are counting on a closing before the end of the year even though the private equity industry is drawing increased scrutiny in Washington.
In acquiring Intelsat, BC will be pursuing a “secondary buy-out”, given that the satellite fleet was already owned by a four-member private equity consortium including Apax, Permira, Madison Dearborn, and Apollo Management.
Such deals are sometimes criticised by investors concerned that the seller may have already squeezed all the returns out of the company before the new owner moves in.