Providence buys into Spanish media group

Specialist private equity group Providence Equity Partners has secured a 25.5% stake in Retos Cartera, beating competition from Apax, Blackstone, Permira and PAI.

Providence Equity Partners, the Providence, Rhode Island-headquartered private equity group specialising in media- and telecom-related deals, has emerged as the largest shareholder in Retos Cartera, a consortium controlling Spanish media group Recoletos Grupo de Communicacion.

According to a press release, Providence has agreed to purchase a 25.5 percent stake in Retos Cartera, which in December of offered to buy Recoletos for €941 million ($1.3 billion). London-headquartered Pearson Plc, the diversified media company with a 79 percent interest in Recoletos, has accepted the offer. The remaining 21 percent of the company's stock is traded on the Spanish bourse.

A source close to Providence said the firm was one of several private equity groups that had considered an investment in Recoletos. The Blackstone Group, Permira, Apax Partners and PAI Partners were among the financial buyers that took a closer look at the company.

Providence joins existing Retos Cartera shareholders Financial Retos Partners with 23.2 percent, Recoletos' management with 12 percent, Spanish savings banks Kutxa and Caja Navarra with 5 percent each and Banco Espanol de Credito SA with 2 percent.

Recoletos is the proprietor of several Spanish newspapers and publishes Expansion, the country’s leading financial broadsheet. The group also controls several magazines and Radio Marca, a sports radio network.

Providence is currently investing Providence Equity Partners V, a $4.25 billion buyout fund raised last year. In Europe, where the firm operates from an office in London, Providence has invested in companies such as Eircom, Casema, Kabel Deutschland and ProSiebenSat.1.

John Hahn, a London-based managing director and former Morgan Stanley investment banker, led the deal for Providence. Calyon Corporate and Investment Bank provided advice, as did Linklaters.