Investors show early interest in TDF sale

04 March 2019 - 12:00 am UTC

At least four infrastructure funds and telecommunication companies are understood to be considering bidding for French telecoms giant TDF, although its broadcast services may put off some bidders.

Switzerland-headquartered Partners Group is understood to be considering bidding for Brookfield’s 45% and PSP Investments’ 22.5% stakes in TDF, which owns 13,900 telecommunications tower sites, and provides fibre-optic broadband, television and radio broadcasting services.

Partners Group manages seven infrastructure funds including its most recent Direct Infrastructure 2016 fund. Partners Group already owns a 50% stake in Paris-headquartered high-speed broadband provider Covage. Fellow shareholder Cube Infrastructure is currently in the process of selling its 50% stake in Covage and is believed to have held discussions with Partners over whether the latter will also sell its stake.

NYSE-listed real estate and communications business American Tower is also considering bidding for the TDF stake, said a buy-side source. 

In December 2016 American Tower partnered with Dutch pension fund PGGM to buy French telecom towers business FPS Towers from Antin Infrastructure for EUR 697m. 

Antin Infrastructure and Cellnex, which is partly-owned by The Abu Dhabi Investment Authority and Singapore’s sovereign wealth fund GIC, are also interested in the TDF sale, as reported. 

A banker following the sale said that they had spoken with 15 potential bidders including infrastructure and pension funds about the sale, but it was too early to gauge their interest. 

Information memoranda are due out later this month, sources said. One added that some investors are waiting to see the virtual data room – which is opened once IMs have been issued – before deciding whether to lodge bids.

Multiple sources close to the process said that Paris-headquartered TDF is believed to have an enterprise value of EUR 4-5bn, which at its highest is a 14.1 multiple of the business’ pre-adjusted 2017 EBITDA of EUR 355m.

Morgan Stanley and BNP Paribas, the sell-side advisers, are looking for an enterprise value of around EUR 6bn, but that would be too high for the bidders, said a buy-side advisor source.  

TDF’s believed EBITDA multiple would come in well below the 18 times KKR paid for a 49.9% stake in Altice’s French telecoms towers business SFR TowerCo. However, TDF’s activities also focus on broadcasting services which are riskier then fibre broadband. The business recorded EUR 676m in consolidated sales from its 2,300 clients in 2017, which were split between telecommunications (47%), television, (26%) and radio (17%) services.   

Brookfield, PSP Investments and APG acquired TDF for EUR 3.56bn from Ardian, TPG, Charterhouse and French state-owned investment entity Bpifrance in April 2015. PSP and APG (22.5%) own their stakes through London-headquartered Arcus Infrastructure managed accounts Arcus Tivana Investor vehicles one and two. Crédit Agricole Assurance’s Predica Infrastructure subsequently acquired a 10% stake from APG in the business for around EUR 215m in May 2015.

Brookfield, Antin Infrastructure and American Tower declined to comment.


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