Blackstone floats satellite operator

Six months after its acquisition of New Skies Satellites, The Blackstone Group has taken the satellite operator public in a $200m IPO, valuing the firm’s equity at almost three times its initial investment.

The Blackstone Group appears to have done it once again.

Less than four months after its successful flotation of German petrochemical company Celanese, which it had purchased a mere nine months prior, the New York-based private equity firm has taken its six-month old portfolio company New Skies Satellite public in an offering valued at approximately $196 million (€152 million).

Although the IPO of the Bermuda-based satellite operator was priced at $16.50 per share, below its initial offering range of $18 to $20 per share, the public market flotation still presents a healthy valuation for Blackstone – its equity stake in the company is now worth $300 million.

The private equity firm originally acquired New Skies in November 2004 in a $983 million transaction. In connection with that transaction, Blackstone contributed $163 million of equity, composed of $153 million in preferred equity, $8.5 million in convertible preferred equity and $1.5 million of common equity according to filings with the Securities and Exchange Commission.

In February 2004, Blackstone was able to take more than half its money off the table when New Skies issued an $88 million dividend to company shareholders. As part of the initial public offering, the company had originally intended to pay of dividend of $71 million to shareholders, as well as $6.1 million to Blackstone in connection with the termination of their management agreement. It is unclear to what extent the dividend may be reduced given the lower IPO price, but at the proposed levels, Blackstone would have been able to cash out almost all of its  investment in the company while still holding a majority stake in New Skies.

[Blackstone’s] equity stake in the company is now worth $300 million.

Blackstone’s flotation of the company comes two months after a similar IPO of satellite company PanAmSat, which also priced below its range, but provided private equity investors Kohlberg Kravis Roberts, The Carlyle Group and Providence Equity Partners a nice profit. KKR reportedly earned three times its initial investment in PanAmSat when the company went public.

Other private equity firms have also been active investors in the satellite industry. Last December, Paris-based European investment company Eurazeo and an investment vehicle owned by Texas Pacific Group and Spectrum Equity Investors acquired a 20.7 percent stake in Eutelsat from Mirror International Holdings in a deal valued at €643 million. And in another deal last year, a consortium consisting of Apax Partners, Permira, Apollo Management and Madison Dearborn agreed to buy Intelsat for $3 billion.