Mid Europa Partners has merged SBB and Telemach, two pay TV companies it owns, to form a cable and satellite television platform serving south eastern Europe.
The combined entity, SBB/Telemach Group, will offer cable and satellite TV, Internet, and fixed and mobile phone services to more than 1.7 million users. It will target a market spanning all of the countries of former Yugoslavia, with the potential to reach more than 20 million inhabitants.
Mid Europa invested in SBB, then Serbia’s leading cable provider, in 2007. It then launched satellite platform Total TV to target the whole of ex-Yugoslavia, and purchased Telemach in 2009.
SBB/Telemach Group also raised €330 million of senior financing from regional and international banks as part of the transaction. The funds will be used to refinance existing debt and support future acquisitions, with a view to further expand in Bosnia, Slovenia and Serbia, according to Knorr.
The transaction illustrates the attractiveness of deal-making in the region. “[The firm sees] similar opportunities in other sectors in this part of the region, where regional champions can be created through consolidation and organic growth,” Knorr said. He saw consumer and retail-focused industries as offering the most potential for M&A.
GPs in the region raised €940 million of fresh capital last year, and investment exits, at €1.39 billion, were triple that of the 2007 peak. David Walker, a partner at Clifford Chance, said this trend is not about to abate, with pan-European and global firms such as Bridgepoint, Advent, EQT, and Warburg Pincus all looking to expand in the region.
The financing part of the deal also represents a vote for confidence for Mid Europa, Knorr said, in what remains a challenging financing environment across Europe. “This was a very complex financing, as it was the region’s first cross-border sponsor financing with multi-jurisdictional debt pushdown.” Mid Europa was able to rely on its relationships with the banks and its track record in the region to bring it to a closing, he said.
The firm has deployed more than 80 percent of its Fund III, which capped at €1.53 billion in 2007. Mid Europe is expected to launch its Fund IV in early 2013.