European buyout house Cinven has sold its remaining shares in Altice, a residual holding that was a result of the firm rolling part of its remaining stake in Numericable into the media and telecoms group.
The sale of these remaining shares brings Cinven’s net capital gain up to €1.7 billion, representing a 4.7x return and an internal rate of return of 157 percent for the deal.
Cinven and Altice created French cable operator Numericable in March 2005, buying up the cable assets of France Télécom, Vivendi-owned Canal+, and TDF for €528 million. The duo subsequently combined these assets with Altice’s cable business in November of that year.
The combined group – which was 70 percent owned by Cinven and 30 percent by Altice – went on to pursue a buy-and-build strategy, making five other cable acquisitions.
In 2008 Cinven sold a 38 percent stake in Numericable to The Carlyle Group. The business was refinanced seven times, allowing Cinven and Carlyle to de-risk their investment, before it was listed on the NYSE Euronext Paris in November 2013.
In April 2014 Cinven and Carlyle agreed to sell their remaining shares in Numericable to Altice in a cash-plus-stock deal following the group’s €17 billion acquisition of French mobile operator SFr from Vivendi.
Altice agreed to acquire the buyout firms’ entire stakes in Numericable – 21.32 percent for Carlyle and 13.27 percent for Cinven – paying cash for around 14 percent of this and buying the remainder in stock, offering 0.97 of one of its shares for each Numericable share. As a result Altice's stake in Numericable increased from 40 percent to almost 75 percent, as reported by Private Equity International.
Following the transaction Cinven retained a 6.8 percent stake in Altice, which it has been gradually selling down over the past year.
Carlyle sold down its remaining shares in Altice during the course of 2014, offloading its final stake in February 2015. It is understood that the firm generated a 1.6x return on its investment.
Cinven partner Nicolas Paulmier said in a statement that the sale of the remaining shareholding brought to an end an “epic case study” in Cinven’s backing of an entrepreneur and a “contrarian project”.
“During Cinven’s ownership, Numericable underwent a complete transformation from a regional operator to the number one alternative French telecom operator and clear French leader in high speed networks,” he said.
“Not only has Numericable generated highly attractive financial returns for its shareholders, the group has also delivered improved products and quality of service to its customers thanks to the dedication of its employees and a significant investment in both its networks and technology.”
Altice president Patrick Drahi highlighted the steps Cinven and Altice took during the financial crisis to stabilise Numericable, “implementing an aggressive and innovative investment and improvement industrial program while reengineering the whole financial structure, both on the debt and the equity markets with several successful bonds issuing and two major IPOs in Europe”.
The stake sale is the latest in a string of exits for Cinven this year. In January the firm completed the sale of UK life insurance consolidation business Guardian Financial Services to Admin Re for a total consideration of £1.6 billion (€2 billion; $2.3 billion). This was followed by the sale of Enserve Group to Grovepoint Capital and the agreement to sell engineering services group Prezioso Linjebygg Group to Altrad Group.
Cinven is also due to close its latest buyout fund on €6.5 billion at the end of April. The fund is understood to be oversubscribed and the firm has yet to decide whether to hold a first and final close at the same time, as reported by PEI.
The firm began pre-marketing last year without a target or hard-cap, but indicated to investors that the vehicle would be in line with its previous funds. Its predecessor, a 2012-vintage vehicle closed on €5.3 billion, while Fund 4 closed on €6.6 billion in 2006.
The private placement memorandum for Fund 6 was circulated in January. This will be the first vehicle raised since Stuart McAlpine replaced Hugh Langmuir as managing partner, announced in September. Langmuir is now executive chairman at the firm.