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KDG IPO in prospect as junk bond market dries up

German cable operator Kabel Deutschland’s (KDG) owners Providence Equity Partners are believed to be moving towards an IPO for the company rather than a sale, according to press reports.

A number of private-equity companies are believed to have offered between €5-5.5bn for the operator, which is 88%-owned by Providence Equity. However, the prospects of a buyout have been diminished in recent days because of problems with the high-yield bond market, seen as key to putting a deal together, leading to speculation that the operator’s owner would postpone a sale.

Reports by Bloomberg and Reuters, citing sources with knowledge of the matter, now suggest KDG may be preparing the flotation of a minority stake as an alternative, allowing Providence to maintain a majority share in the company. 

According to a Financial Times report yesterday, Providence hopes to raise about €1bn from the IPO. Providence is believed to have favoured a flotation before the recent flurry of interest from private-equity groups in acquiring the operator.