GMT Communications Partners, a sector-focused European buyout specialist, has ambitious plans to double the size of Melita Cable, after revealing that it has taken a majority stake in Maltese television and broadband supplier.
Terms were not disclosed, but a banking source said the deal valued the company at about €170 million ($234 million). The company was previously owned by the Gasan Group, which will remain as a minority shareholder, and US-listed cable operator Liberty Global.
GMT managing partner Jeff Montgomery told PEO that his firm had first come across the business more than 15 years ago, but it only “came back onto the radar screen” about three months ago. GMT’s success in the limited auction process, which was run by ABN AMRO, was due to its sector expertise and its tie-up with Gasan, he said.
Melita supplies TV, broadband and telephony services to Maltese consumers and businesses. It is the sole provider of cable television, and has recently secured exclusive rights to show next season’s English, Italian and European football leagues – all of which are hugely popular in Malta. It also has a growing internet telephony service called “Hello”. Last year the business made a profit of about €17 million on revenues of €35 million.
GMT is backing the existing management team, led by Philip Micallef, most of whom have been with the company throughout its 16 year history. It has no plan to supplement the team, according to Montgomery.
The buyout firm, which specialises in investments in the communications sector, plans to double revenues and profit at Melita over a “three to five year” time horizon. Montgomery said this growth would be spread evenly across next generation telecoms like internet telephony, where the company currently has a 7 percent share of a fragmented market, broadband migration, and additional digital services as the country switches over from analogue broadcasting.
GMT will be applying a well-tested model; this is its eighth deal in the European cable TV and telecoms sector. “We can bring to bear a very broad industry knowledge,” Montgomery said.
In its 17 years of operation, GMT has produced a gross internal rate of return of 28.7 percent across all of its 25 investments, a 2.6 times return on capital. The firm has recently enjoyed successful exits from two of its portfolio companies: Invitel, which was sold to Hungarian operator HTCC for €470 million, and Casema, sold to Cinven and Warburg Pincus for €2.1 billion.
Rothschild advised GMT, while GE Commercial Finance provided debt for the deal.