Mid Europa seals 3x exit to KKR

The exit comes as Mid Europa seeks to raise €1bn for its fourth buyout fund, which is expected to hold a first close before the end of the year.

London-based Mid Europa Partners will sell Serbian TV-provider SBB/Telemach Group to Kohlberg Kravis Roberts, generating a 3x return multiple, according to a statement.

SBB/Telemach provides pay TV and broadband internet services in Serbia, Slovenia, Bosnia, Croatia, Montenegro and Macedonia and has approximately 1.7 million customers. Financial details for the deal were not disclosed. The transaction is subject to customary regulatory approvals by local competition authorities.

Mid Europa invested in SBB/Telemach using capital from its €655 million Fund II and its €1.57 billion Fund III, according to a source with knowledge of the situation. Mid Europa declined to disclose which funds the investment came from.

Under the firm’s ownership, the SBB/Telemach’s earnings before interest, tax, depreciation and amortisation has grown at an annual rate of 37 percent. 

“We have taken a national champion and transformed it into a pan-regional leader”, Robert Knorr, a senior partner at Mid Europa, said in the statement, adding that this was possible “through the combination of a strong business, operating in an attractive region, an exceptional management team and the flawless execution of a complex buy-and-build and organic regional expansion strategy.”

The exit comes as Mid Europa is raising capital for its fourth buyout fund. It is understood that the fund, which is targeting €1 billion and has a €1.25 billion hard-cap, came to market in February. Mid Europa hired Credit Suisse as a placement agent in September last year to prepare the paperwork, a source told Private Equity International in July. The firm is expected to hold a first close late in the third quarter of the year or early in the fourth quarter, PEI reported at the time. 

KKR will partner with the executive management team led by founder Dragan Šolak, which will retain a substantial stake in the business. 

“This is our first direct investment in Southern Eastern Europe,” KKR's co-founder and co-chief executive officer Henry Kravis said in a separate statement. “It adds to our investments in more than 40 European companies across 12 countries and it is a sign of our confidence in the prospects of SBB/Telemach Group.”

It is understood KKR made the investment from its third European buyout fund. As of July 2013, Fund III had commitments of $6.07 billion, with $4.34 billion invested and $1.72 billion of uncalled commitments.