Inmarsat attracts PE interest

Inmarsat (International Mobile Satellite), the UK-based satellite operator which has twice shelved plans for a UK stock market listing, is the subject of interest from private equity firms over a £1bn buyout.

Permira, Cinven, Apax Partners and Providence are all keen to take a closer look at the firm, which has suffered from the downturn in the telecommunications market. Indicative offers for the firm are expected as early as November, according to a report in the Financial Times today.

Inmarsat and its fellow  satellite  operators,  Eutelsat (European  Telecommunications Satellite) and Intelsat (International Telecommunications Satellite) were originally to have been privatised by October 2000, as both US and European governments, which had backed their establishment sought to make the businesses more competitive with their wireless rivals.

The companies are predominantly controlled by European and US telecoms companies, some of whom are struggling under large debt piles and who  are  now  seeking to offload their interests  to raise cash. France Telecom, which holds a 23.1 per cent stake in Eutelsat, recently tried to sell its interest to French private equity house Eurazeo. The deal collapsed when the two firms failed to agree a price.

All three businesses are attractive to private equity firms because of their strong cash flows and profitability. Inmarsat, the smallest of the three, reported 2001 net income of $66m on revenue of $442m, Intelsat reported 2001 net income of $499m on revenue of $1.1bn, and Eutelsat reported net income of $298m on revenue of $646m in 2000.

The shareholding telecoms groups have already commenced the sale of their interests in Eutelsat. In January, Telecom Italia sold its stake in all three companies for $480m to Lehman Brothers' private-equity group. Earlier this month after the termination of discussions with Eurazeo, reports emerged of possible bids from Apax Partners and Carlyle Group for Eutelsat.