London-based Cinven has agreed to acquire network operator Gas Natural Fenosa Telecomunicaciones (GNFT), from Gas Natural Fenosa for €510 million, according to a statement.
GNFT provides infrastructure and transmission services to telecom operators in Spain and Latin America, with a focus on fibre internet connection. The company, which has a strong cash flow generation in Spain, saw a 13 percent EBITDA increase between 2011 and 2013.
Cinven believes there’s a significant growth opportunity in Latin America as markets are developing and fibre internet connectivity and capacity demand is increasing fast, the firm said in the statement. There’s a structural growth in data traffic and fibre networks deployments in both Spain and Latin America driven by increased usage and penetration of fixed and mobile broadband, the firm added.
“The principal growth drivers for broadband globally are cloud computing, high speed fixed and mobile access and data explosion. Neutral carriers, like GNFT, are well positioned to capitalise on this explosion in capacity demand,” Thomas Railhac, a principal at Cinven, said in the statement.
It is the first time in nine years Cinven has acquired a Spanish business. In June 2005, Cinven and BC Partners acquired Amadeus, a Spanish travel booking business, for €4.34 billion, which was floated on the Madrid stock exchange in 2010. Cinven sold down its final shareholding in November 2011 generating a 7x return.
Until one year ago, investing in Spain was challenging due to the [macro-economic] situation in Europe, Jorge Quemada, a partner at Cinven told PEI. “The market is picking up now, however Cinven is not driven by the investments it wants to do in a particular country, but we are much more looking at where we would like to deploy our money from a sector point of view,” he said.
The investment in GNFT is the ninth investment from Cinven’s Fifth Fund, €5.3 billion vehicle which the firm raised last year. In April, Cinven joined forces with Kohlberg Kravis Roberts and HgCapital to invest in Visma Group, a Nordic software company, in a deal that valued the business at NOK 21 billion (€2.5 billion, $3.5 billion). In February, Cinven acquired healthcare contract research organisation Medpace for $915 million from CCMP Capital Advisors.
Last August, Cinven agreed to buy a majority stake in Heidelberger Leben, a specialist provider of retirement and life insurance products in Germany. Last July, it backed Host Europe Group, a European provider of hosting and domain services to SMEs, for £438 million. A month prior to that, Cinven acquired CeramTec, a global manufacturer of ceramics for the medical and automotive industry for €1.49 billion. The acquisitions of Pronet, a provider of security electronic alarm systems in Turkey, Prezioso, a provider of coating and insulation services business, and Amdipharm Mercury Company (AMCo) also came from Fund V.