Nordic investment group East Capital Explorer has struck a deal to sell its entire 63% in pan-Baltic cable operation Starman Group to Providence Equity.
The agreement in principle would see East Capital Explorer sell its stake in Starman for an upfront payment of €81 million in cash with the potential of an additional earn-out of up to €5 million payable in 2017. According to the investment group, the deal represents a total enterprise value of €210 million.
East Capital Explorer expects to make a gain of €35 million on exiting Starman, representing a rate of return of over 30%.
The group said that since it acquired Estonia’s Starman in 2013 the cable operator’s revenues and EBITDA had grown on average by 11% a year.
In February last year, East Capital Explorer made an additional investment in the operator that enabled it to acquire Lithuania’s Cgates to create a pan-Baltic cable TV and broadband provider. Cgates extended this consolidation in July by acquiring fellow Lithuanian operator Kava.
“I am pleased to announce this, which will be one of the largest private equity transactions in the Baltics to date. We have strengthened investments in technology, product development and market consolidation, and worked closely together with the management team. This has enabled Starman to outgrow its competitors and transform from a national challenger into a regional leader. We are confident that Providence will enable Starman to continue to develop successfully in this exciting and fast evolving market,” said Kestutis Sasnauskas, head of private equity and real estate at East Capital.
Aivo Adamson, CEO of Starman Group, said: “Starman has in recent years intensively focused on growth and expansion in our Baltic home market, supported by East Capital Explorer. We are committed to offering our clients innovative and superior telecom and entertainment solutions. We are confident that with the addition of a strong financial investor, with over 25 years of experience of telecom investments, as our new majority owner, we can continue on the path of innovation and growth in the Baltic region.”
Karim Tabet, managing director at Providence, said: “The acquisition of Starman Group would represent Providence’s continued commitment to investing in infrastructure to support the delivery of high quality media and communication services in the Baltic region.”