* Cinven buys GNFT for 510 mln euros
* Spain's biggest private equity buyout this year
* Cinven targets Latin American growth
(Adds Cinven comment, details)
By Freya Berry and Paul Day
LONDON/MADRID, June 9 European private equity
firm Cinven has bought the fibre network arm of
Spanish utility Gas Natural for 510 million euros
($694.4 million), the companies said on Monday, in Spain's
biggest private equity buyout of the year.
Gas Natural will book capital gains of around 250 million
euros, before tax, from the sale of Gas Natural Fenosa
Telecomunicaciones (GNFT), the Spanish group said.
GNFT offers services across cities in Spain and Latin
America. Its core earnings (EBITDA) grew at a compound annual
growth rate of 13 percent over the last three years, including a
rate of 20 percent in Latin America.
"There will be an increase in data transmission, with fibre
being the backbone for that growth to happen," Jorge Quemada,
partner at Cinven, said in a telephone interview with Reuters.
"We see opportunities to deploy more fibre in Central
America and Colombia."
Private equity activity in Spain has been sluggish since the
financial crisis. Leveraged buyout activity totalled 2.8 billion
euros in 2013 by value, according to Thomson Reuters data, half
that of the 5.6 billion euros in 2007.
Spain emerged from its second recession since 2008 in the
second half of 2013. The economy grew at its fastest quarterly
pace in six years in the January to March period, prompting the
government to raise their forecasts for this year and next.
But despite the improvement, private equity firms have
struggled to deploy capital in the battered economy, with few
major buyout opportunities.
"In the last three years we have actively been looking at
investments in Spain," Quemada said. "The first one-and-a-half
years were challenging...but we think now that the situation is
ORGANIC GROWTH, SMALL ACQUISITIONS
Quemada added that while growth in Spain would be mainly
organic, opportunities for consolidation were possible through
small acquisitions. GNFT's assets are mostly located in Central
America, where Gas Natural's electricity arm installed fibre
optic networks alongside power cables.
Cinven's purchase will be financed with an all-senior
leveraged loan financing led by UBS and Barclays. The loans will
be syndicated to other lenders in the coming weeks, banking
Gas Natural has been in the telecoms business since 1998
when it bought its Spanish optic fibre network from Enagas, the
same year that Union Fenosa deployed fibre networks in Central
and South America. The two companies merged in 2009. Gas Natural
did not say how it intended to use the proceeds from the sale.
GNFT is the ninth investment by Cinven's 5.3 billion-euro
Fifth Fund. Earlier in the year the private equity house further
sold out of French cable operator Numericable,
realizing a return of 4.35 times its original investment.
Gas Natural shares ticked up to 21.925 euros at 1127 GMT,
broadly in line with Spain's blue-chip index.
($1 = 0.7345 Euros)
(Additional reporting by Paul Day, Tracy Rucinski, Andrés
González and Jose Elías Rodriguez, and Claire Ruckin at IFR;
Editing by Erica Billingham and Susan Thomas)