Stirling Square lines up €400m telco exit

AXA Private Equity, Antin Infrastructure Partners, Cube Infrastructure, F2i and 3i are all said to have submitted non-binding bids for Italian business Metroweb.

Stirling Square Capital Partners has put Italian business Metroweb, the owner of a 5,100-kilometre fibre optic network in Milan and Lombardy, up for sale and several European infrastructure funds have lined up to acquire it.

AXA Private Equity, Antin Infrastructure Partners, Cube Infrastructure, F2i and 3i are all said to have submitted initial, non-binding bids for the company – of around €400 million, two sources said – last week. That amount is equal to 10x the firm’s 2010 earnings before interest, tax, depreciation and amortisation (EBITDA), which stood at €40 million.

The sellers are Stirling Square Capital Partners, a London-based private equity firm which owns 76.5 percent of Metroweb, and Italian utility A2A, which owns the remaining 23.5 percent. The latter, however, is expected to convert a bond it holds that will increase its stake in Metroweb to 40 percent once the sale is agreed.

Stirling Square is a London-headquartered private equity firm. It was established in 2002, invests in mid-market companies accross Europe and last year closed its second fund on €375 million. It invested in Metronet in 2006.

The two sources said Metroweb, despite being a telecommunications company, has strong infrastructure characteristics, with a stable revenue profile and manageable capex requirements. The firm earns its keep leasing its fibre optic network to internet providers and other telecommunication companies.

The leasing contracts can be short-term (between one and three years) or long-term (up to 15 years), Metroweb writes on its website. In its 2009 annual report, the company said it “does more than 80 percent of its business volume” with Italian broadband provider Fastweb.