3i buys Eltel from IK(2)

European buyout firm 3i has bought Eltel Networks, a Nordic electricity and telecommunications business, from Industri Kapital. The sale, which generated a return of nearly 2.5 times IK’s original investment, is the latest in a series of lucrative exits for the Nordic buyout firm.

Nordic private equity firm Industri Kapital has sold Eltel Networks, a Finnish provider of electricity and telecommunications services, to London-listed firm 3i.

 

Terms were not disclosed, but a source close to the deal said the sale represented a 2.5 times return on IK’s initial investment.

 

Eltel designs networks for the telecommunications and electricity sectors and generated €756 million ($1 billion) in sales in 2006, with earnings before interest and tax of €34 million. IK created Eltel in 2005 when it merged two portfolio companies – Telefos, which it had bought in 2004, and Swedia Networks, which it had acquired three years earlier.

 

The deal is 3i’s second Finnish investment this month, after the firm bought a 25 percent stake in Finnish mobile operator DNA OY for €140 million. 3i has €10.7 billion under management.

 

IK, which has nearly €4 billion under management, has completed several lucrative exits in recent months. Its sale of Swedish housebuilder Prevesta for €204 million in March generated a return of more than ten times the original investment. The firm is thought to be about to hit the fundraising trail again for another buyout fund, which will have an initial target of €1.25 billion.