Mid Europa Partners and GMT Communications Partners have announced today that they expect to raise EURO118m through the sale of part of their holdings in Invitel Holdings, Hungary’s second largest fixed line telecoms operator.
Invitel’s network covers 14% of the population and provides voice, data and internet services to residential and business customers. It serves nearly half a million subscribers and over 20 thousand businesses.
Mid Europa and GMT have entered into agreements relating to the sale of 14.2% of Invitel each to Invitel’s senior management (to be structured as a share buy-back by Invitel), thus reducing their holdings from 47.5% to 33.33%. Following the offering the AIG Emerging Europe Infrastructure Fund, GMT and Invitel’s senior management will each hold 33.33% of Invitel.
EEIF and GMT each purchased 50% of Invitel’s operating subsidiaries (formerly known as Vivendi Telecom Hungary) in May 2003 from Vivendi Telecom International S.A.
Tim Green, Managing Partner of GMT Communications Partners, said: “As the largest telecoms and media private equity specialist in Europe we have been watching carefully the fixed line telecoms industry for some time. There is value in this area of the market. Hungary has a young, educated population who tend to be early adopters of added-value broadband services. This is a great company and management team with strong performance in a recently overlooked segment of the telecoms industry.”
Craig Butcher, Partner of Mid Europa, said: “Invitel has proven to be another successful investment for Mid Europa in the Central Europe telecommunication sector. The issue of floating rate senior PIK notes by Invitel used to fund the purchase, the first by a Central European issuer, has allowed Mid Europa and GMT to achieve a return of around 3 times our initial investment so far and remain significant shareholders in Invitel. We look forward to capitalising on its strong cash flow generation potential along with the strategic initiatives that we have put in place with management. We expect these to generate significant shareholder value in the future.”