PE consortium floats PanAmSat for $900m

The IPO of $18 per share was less than the amount expected by the KKR-led group of investors.

A private equity consortium has raised $900 million (€673 million) through the flotation of satellite company PanAmSat less than a year after Kohlberg Kravis Roberts (KKR) took the Nasdaq-listed company private.

The Financial Times reports that the New York-based buyout house realised three times its original cash investment on the sale of 50 million shares at a price of $18 each. However, this is below the range of $19-$21 per share anticipated before the deal.

PanAmSat, which is based in Wilton, Connecticut, operates 29 satellites, 24 of which are wholly owned by the company. According to a press release, this fleet is capable of reaching more than 98 percent of the world’s population.

KKR took the company private in an LBO in April 2004, paying $547 million in cash in a deal worth $3.55 billion. It also assumed around $750 million in debt, giving a total deal value of $4.3 billion.

The firm arranged syndication in June, selling the Carlyle Group and Providence Equity a 27 percent share each and reducing its own stake to 44 percent. The consortium later arranged further debt financing to pay shareholders a $246 million dividend.

Reports suggest that, following the IPO, KKR will retain a 26 percent stake in PanAmSat, while Carlyle and Providence Equity will retain 16 percent each. Shares in the company will be traded on the New York Stock Exchange.

PanAmSat said in a statement that it would use $200 million of the money received from the flotation to pay a shareholder dividend. A further $342.5 million will be used to repay debt.

Recent months have seen a rash of investments in satellite companies by private equity firms. Last December, Paris-based European investment company Eurazeo and an investment vehicle owned by Texas Pacific Group and Spectrum Equity Investors acquired a 20.7 percent stake in Eutelsat from Mirror International Holdings in a deal valued at €643 million.

In another deal last year a consortium consisting of Apax Partners and Permira in London, New York's Apollo Management and Chicago's Madison Dearborn Partners agreed to buy Intelsat for $3 billion.