Building on Cinven’s successful TMT and Iberia track records Sale of Ufinet Group generates over €1.1 billion capital gain
International private equity firm, Cinven, today announces that its Fifth Fund has agreed to sell Ufinet Group (‘the Group’), a leading independent fibre network operator in Spain and internationally, to a consortium formed by Antin Infrastructure Partners (which is acquiring Ufinet Spain) and the Sixth Cinven Fund (which is acquiring Ufinet International) for an undisclosed consideration.
Headquartered in Madrid, Ufinet provides fibre infrastructure and transmission services to telecom operators in Spain and international markets. The Group has a fibre network spanning more than 66,800 kilometres across two continents and employs approx. 1,020 people.
Cinven acquired Ufinet in June 2014 from Gas Natural Fenosa (‘GNF’), the largest integrated gas and electricity provider in Spain, for €510 million. Following the complex carve-out of Ufinet from GNF, Cinven’s strategy was to invest in the business to drive growth through internationalisation and significant buy and build activity in a sector and geographic markets where Cinven has significant expertise.
Over the past four years, Cinven has worked closely with Ufinet’s management team to achieve:
- Execution of a complex carve-out from a Spanish utility provider. With support from Cinven’s Portfolio team, an extensive project was undertaken to create a standalone entity, including creating independent reporting, IT and accounting systems;
- Significant internationalisation of the business through add-on acquisitions and organic growth with more than two thirds of revenues generated internationally today (vs. less than half at acquisition);
- Successful value-accretive buy and build strategy, including five acquisitions which have expanded Ufinet’s presence across Latin America including Colombia, Argentina, Chile, Costa Rica, Ecuador, Panama and Paraguay;
- Significant investment in Ufinet’s fibre network across Spain and international markets, with more than €170 million invested into network expansion, including rolling-out ‘Fibre to the Home’ (‘FTTH’) and ‘lit’ services in metropolitan areas in Spain;
- Strengthening the management team, with senior appointments including a new Chairman, CFO and Head of Corporate Development; and
- Strong financial performance with 25% annualised EBITDA growth over the past three years, treble the 8% annualised growth rate before acquisition, driven by strong growth momentum in international markets and robust growth in Spain.
Cinven has a strong and successful track record in the TMT sector, with previous investments including telecom businesses Ziggo in the Netherlands and Numericable in France.
In Iberia, Cinven successfully invested in Amadeus, the global travel transaction processor and provider of advanced technology solutions, and currently owns: Hotelbeds Group, the global travel services provider; Tinsa, the property valuation and advisory services business; and Planasa, a global berries breeding and nursery company. Ufinet is the first divestment since the Cinven Madrid office opened in 2015.
Jorge Quemada, Partner at Cinven, said:
“Cinven’s investment in Ufinet was originated by our Iberia team, alongside our TMT team, reflecting the effectiveness of our sector-regional matrix. In particular, our Iberia team had been monitoring potential asset disposals from large utility providers following numerous electricity reforms in Spain in 2010. We worked for a long time building up our knowledge of the business and the market in order to pre-empt the transaction process, as well as gain the backing of the Ufinet management team.”
Miguel Segura, Principal at Cinven, added:
“Ufinet has been a highly successful carve-out and case study of value creation. Our strategy has focused on accelerating growth in Spain and international markets by investing significantly in the expansion of the network, implementing growth-oriented initiatives and launching new services, for example FTTH; as well as the consolidation of regional fibre operators. We have worked with a first class management team, led by Iñigo García del Cerro, who have been instrumental in driving that strategy.”
Iñigo García del Cerro, CEO of Ufinet, commented:
“Ufinet has demonstrated significant growth over the last four years in our existing Spanish market and particularly across Latin America given the increasing demand for fibre connectivity and capacity, as well as the increased usage and penetration of fixed and mobile broadband.
“Ufinet had been a well-invested business under GNF, but working in partnership with Cinven enabled us to capitalise on the attractive opportunities in high growth markets in Central and South America significantly; as well as accelerate the investment in our fibre optic networks to further expand the business in Spain.”
In the TMT sector, this transaction follows the successful realisation of HEG, the web hosting provider, to GoDaddy Inc. In addition, Cinven most recently realised its investments in CeramTec, the global manufacturer of high performance ceramics, and CPA Global, a leading global IP management and technology company.
The respective sale transactions are not subject to any mandatory conditions (regulatory or otherwise) and both are expected to complete simultaneously in July 2018.