CVC, JP Morgan buy Singaporean Yellow Pages

The two equity houses have teamed up to share risk and reward in a $127m buyout of Singapore Telecommunications' directories business.

(PrivateEquityCentral.net) CVC Asia Pacific, Citigroup’s Asian venture capital arm, and JP Morgan Partners Asia have acquired Singapore Telecommunications (SingTel’s) Yellow Pages directories business for approximately S$220m ($127.2m) in cash.

Yellow Pages publishes six main telephone directories with a combined circulation of 3.1m copies, and reported total sales of S$83.5m for the year ended March 31, 2002. Yellow Pages makes up approximately 2 per cent of SingTel’s domestic business in terms of revenue.

The winning partners beat out competition for the business from approximately 10 other bidders, including Telstra, Australia's largest telecommunications operator, which sought to add the company to its advertising subsidiary Sensis.

SingTel appointed financial advisers in August last year to help it dispose of non-core assets such as Singapore Post and SingTel Yellow Pages in order to trim some of its S$9.6bn in debt. SingTel sold out of its 69 per cent stake in Singapore Post last month for S$761m.

Shares of Singapore Telecommunications Ltd surged to a nine-month high of S$1.53 per share on Monday after the firm said it would sell the Yellow Pages business.

CVC has a $750m investment program for Asia, while JP Morgan Partners Asia has a $1.1bn fund dedicated to fund buyouts in the Asia region.

The transaction is the latest in a series of private equity funded deals in the global telephone directories industry. Last month, New York-based media merchant bank Veronis Suhler Stevenson, through its VS&A Communications Partners III private equity fund, and UK private equity firm 3i Group acquired six European directory operations of Verizon Communications unit Verizon Information Services for an undisclosed amount.

Last September, GS Capital Partners, the private equity arm of investment banking firm Goldman Sachs, announced it would invest $200m in yellow pages advertising marketer R.H. Donnelly to help fund that company’s $2.23bn acquisition of Sprint’s directories business.

Earlier that month, Kohlberg Kravis Roberts teamed up with the Teachers’ Merchant Bank to acquire the Bell Canada directories business from BCE, Canada's largest communications company, in an all-cash C$3bn buyout.

Last August, in the largest buyout since KKR’s legendary takeover of RJR Nabisco in 1989, The Carlyle Group and Welsh, Carson, Anderson & Stowe acquired Qwest’s yellow pages business, QwestDex, for $7.05bn.

Other buyouts in the sector include Spectrum Equity Partners’ acquisition of the Cincinnati Bell directories unit of Broadwing for $345m; the acquisition of McCleodUSA Publishing from struggling telecommunications company McCleodUSA for $600m by Hicks, Muse, Tate & Furst and Apax Partners, who then merged the company with the Yell yellow pages subsidiary of British Telecommunications they jointly acquired in a £2.14bn deal, the largest ever European leveraged buyout; Texas Pacific Group’s acquisition of Telenor Media, the directories business of Norwegian telecommunications company Telenor, in a buyout valued at $655m; Thomas H. Lee Partners, which led an investor group including CIVC Partners, Canadian Imperial Bank of Commerce, Providence Equity Partners, and the management of Thomas Lee portfolio company TransWestern Publishing in a $900m recapitalisation of print and internet telephone directories provider WorldPages.com.

The CVC/JP Morgan Singapore Yellow Pages acquisition is the first deal in the sector to be completed in Asia.