Argus sells Hungarian cable stake to Warburg

Warburg Pincus has acquired a majority stake in Hungarian cable operator FiberNet in a transaction valued at $72m in a rare Eastern European LBO.

Central Europe-focused private equity firm Argus Capital Group has sold its stake in Hungarian cable operator FiberNet to global investor Warburg Pincus in a transaction with an overall value of $72 million (€60 million).

Argus is believed to have realised a money multiple return of 2.6 times its original 1999 investment of $12.5 million, according to a source close to the transaction.

Warburg Pincus’ undisclosed equity investment is part of an overall funding package that includes new funding to allow business expansion. Acquisition finance for the transaction was provided by Austria’s Raiffeisen Bank.

Argus’ original investment was made from its $172 million Central European private equity fund, which closed in September 2000. The fund is understood to be approximately 80-85 percent committed at this stage.

The remainder of the fund will be reserved for follow-on investments and a source close to the firm indicated that Argus would be likely to raise new money in the near future.

Argus’ debut fund attracted commitments from ten institutional investors from North America, Western Europe, the Middle and Far East and is advised by a group of eight investment professionals in offices in London, Prague, Warsaw and Budapest.

Commenting on the transaction, Warburg Pincus managing director Joe Schuell said in an interview with PEO: “We believe there are a number of attractive opportunities for FiberNet, both for organic growth and acquisition. 38 percent of the Hungarian cable market is still run by ‘mom and pop’ operators, which will end up being owned by the major operators.”

Warburg Pincus’ investment was made from two international funds from which it is currently investing – the $5.3 billion Warburg Pincus Private Equity VIII LP and the $2.5 billion Warburg Pincus International Partners LP.