Numericable to list up to 40% of capital in IPO

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Numericable plans to list 20-40 per cent of its capital in an initial public offering, the French cable operator’s chief executive said.

The company, which provides internet, television and fixed-lines services and is owned by private equity companies Carlyle, Cinven and Altice, said that it also intended to raise €200m-€250m of additional capital.

Eric Denoyer, Numericable’s chief executive, said the listing would give the company “the means to invest more in our network to drive growth”. In a press conference on Thursday, he added: “By increasing our capital expenditure, we will enter a new growth cycle.”

The plans come as investors have shown heightened interest in European cable operators, which has resulted in rising stock market valuations.

Carlyle is also seeking to show it is able to return cash to its investors, to facilitate the fundraising of its next European buyout vehicle. The Washington-based private equity group is targeting €3bn.

Numericable’s private-equity owners decided to work on a listing in April after dropping negotiations with French media group Vivendi over a €15bn merger of the cable company with SFR, Vivendi’s mobile phone business.

Both groups had held advanced discussions since the previous summer over a deal that was expected to result in about €1bn in operating synergies, according to a person familiar with the talks.

Vivendi suspended the talks soon after the appointment of Vincent Bolloré, who controls the Bolloré industrial group, to its board. Mr Bolloré, who is now Vivendi’s largest shareholder with a 5 per cent stake, became the french conglomerate’s vice-chairman last week.

A day later, Vivendi announced that it would launch a study into the possibility of splitting in two, by spinning off SFR. In a press release, the company said the demerger proposal would allow SFR to “gain greater freedom on strategy and developing partnerships”.

Negotiations could resume between Vivendi and Numericable – though people familiar with the process said that there was no possibility of that happening any time soon. They also said SFR’s announcement in July that it would enter a network-sharing agreement with Bouygues, a French mobile operator, would add another layer of complexity if talks were to resume.

Analysts previously estimated that Numericable has an enterprise value of about €4bn, including debt. Carlyle invested €1.1bn in March 2008 to buy a 38 per cent stake in the cable company in a deal that valued the group at €6.5bn then.

The purchase, which included Completel, the business-to-business cable operator, enabled Cinven and Altice, which owned Numericable then, partially to cash in.

In its initial public offering document, Numericable said it expected annual sales to grow between 2 per cent and 5 per cent a year between now and 2016. Last year, sales were €1.3bn.

The company expects to spend €220m to €230m to upgrade its network but also to reduce its debt ratio from about 4.5 times adjusted earnings before interest, taxes, depreciation and amortisation to 3.5-4 times over the next three years.

Deutsche Bank and JPMorgan are joint book runners for the transaction.

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