Providence to take control of KDG

Providence Equity Partners has reportedly completed its third European telecoms deal in a fortnight, buying its co-owners’ stakes in the German cable TV operator.

Pan-European buyout firm Apax Partners and Goldman Sachs Capital Partners, the private equity arm of Goldman Sachs, have sold their stakes in German cable TV operator Kabel Deutschland (KDG) to fellow private equity house, Providence Equity Partners, according to press reports.

Providence Equity Partners will supplement its own holding of 31.7 percent in KDG with the acquisition of both Apax and Goldman Sachs’ 31.7 percent stakes in a transaction valuing the cable network operator at €3.2 billion ($3.8 billion).

KDG management, including executive chairman Tony Ball, currently retain a 4.9 percent stake. Ball, a former chief executive of BskyB, was brought on board earlier this year.

Apax Partners and Goldman Sachs Capital Partners are reported to have received €250 million each for their KDG shares, representing a money multiple of almost four times their original investment.

Neither Apax Partners Germany nor Providence Equity Partners were available for comment.

The consortium acquired Kabel Deutschland from Deutsche Telekom in March 2003 for €1.7 billion. Apax invested from its €4.4 billion Apax Europe V fund; Goldman Sachs from its $5.25 billion (€4.48 billion) GS Capital Partners 2000 fund; and Providence Equity Partners from its $2.8 billion Providence Equity Partners IV fund.

Munich-based KDG is Europe’s largest cable operator, with around 10 million German subscribers. According to Apax, the company had turnover of more than €1 billion at the end of financial year 2004 to 2005 and over 2,500 employees.

Providence Equity Partners has upped its share of the European telecoms market recently. Last week, the Rhode Island-based firm partnered with The Carlyle Group to buy Swedish television, internet and telecoms company Com Hem from Stockolm’s EQT Partners for over €1 billion; at the end of November, it was part of a consortium, including Apax Partners, Kohlberg Kravis Roberts, Permira and Blackstone Group, that made a €10 billion bid for TDC, Denmark’s largest telecom operator.