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Thor Bjorgolfsson, Iceland’s first billionaire, has sold Ceske Radiokomunikace, a leading Czech Republic telecommunications company, to a group of private equity investors for €1.19bn ($1.54bn), in one of the largest leveraged buy-outs in central Europe.
The landmark deal underlines private equity’s continuing appetite for telecoms and its growing ability to raise substantial debt finance for central European transactions.
The consortium purchasing CRa consists of Lehman Brothers’ private equity business, Mid Europa Partners, a buy-out fund focused on central and eastern Europe, and Al Bateen, an Abu Dhabi-based company for Middle East investors. It raised €750m of senior and mezzanine debt to part-finance the deal.
Mr Bjorgolfsson, who made his fortune through investments in the banking, pharmaceuticals and telecoms industries, confirmed that the consortium had agreed to pay €1.19bn.
The consortium also gets CRa’s 39.2 per cent stake in T-Mobile Czech Republic, a Czech mobile business controlled by Deutsche Telekom, Germany’s biggest telecoms group.
Mr Bjorgolfsson held a 70 per cent stake in CRa via an investment fund. Some of the remaining 30 per cent was held by a group of former Deutsche Bank bankers.
When Mr Bjorgolfsson first bought a stake in CRa in 2001, it was his first telecoms investment. Novator, his London-based investment vehicle, holds minority stakes in several European telecoms companies.
CRa reported revenues of Kc2.3bn ($107m) in 2005 and forecasts sales of Kc3bn this year. It is the country’s second biggest alternative fixed line telecoms operator, providing retail and wholesale services to about 450,000 clients.
It also runs the Czech Republic’s radio and television broadcasting infrastructure, a highly sought-after asset as digitisation looms.