Cinven makes good return on satellite deal

Consortium sale of Eutelsat stake to a Spanish construction firm has helped European buyout firm Cinven to a return of 4.6 times its orginal investment.

Cinven, part of the buyout consortium selling its stake in French satellite operator Eutelsat, has made almost five times its money on the deal.

Abertis, a Spanish construction company, is acquiring Eutelsat from Cinven, Texas Pacific Group, Spectrum Equity Investors and Goldman Sachs, which are selling their control stake in the satellite firm for €1.07bn ($1.4bn).

Abertis is also taking on €800m of Eutelsat debt as part of the deal which it will finance via a bridge loan.

Bernard Valentin, a partner at Cinven, said it had been a good deal. “The investment thesis was to buy a highly cash generative business with growth potential in an industry that was moving in a better direction and much more capital conscious,” he said.

Under the consortium’s ownership, Eutelsat had grown revenues by a compound annual growth rate of 9 percent. Valentin said the consortium had bought at seven times EBITDA and sold at ten times helping Cinven to make 4.6 times its original investment.

The satellite company said last month it had appointed Lazard to advise on a takeover approach from an unidentified suitor.

Eurazeo, the French buyout firm which owns a 25.5% stake in Eutelsat, is retaining its stake.

The private equity firms backing Eutelsat sold new shares worth 33% of the company in a €860m initial public offering last November. Goldman Sachs, Deutsche Bank, Lehman Brothers, Merrill Lynch and Morgan Stanley acted as bookrunners.