* Australia contractor Leighton selling NextGen to cut debt
* NextGen contributed about 10 pct of Leighton's FY2011 EBIT
* Multiple PE buyouts in Australia have stalled in 2012
By Stephen Aldred
HONG KONG, Dec 14 KKR & Co LP has jumped
into the auction for the fibre-optics business being sold by
Australian contractor Leighton Holdings Ltd, a source
familiar with the process told Reuters, eyeing a business that
analysts say could fetch as much as A$870 million ($918
KKR's entry into the NextGen sale pits it against rival
Providence Equity Partners and Australian telecommunications
group TPG Telecom Ltd and underscores buyout firms'
strong interest in one of Asia-Pacific's busiest private equity
Several private equity deals have stalled this year in the
region's fourth-largest economy, however, dogged by valuation
issues as the regional economy and markets sagged, although
Leighton's need to pay down debt is expected to bolster the
chances of this deal going through.
Leighton, controlled by Spain's ACS SA, is selling
the intercity fibre-optic business, known as NextGen, and two
smaller data businesses Metronode and Infoplex.
KKR, Providence and Leighton declined to comment. TPG
Telecom was not available for an immediate comment. The source
declined to be identified as the sale process was confidential.
Australia has seen some of Asia-Pacific's biggest leveraged
buyouts in recent years but its private equity-backed M&A
volumes fell by more than half to $2.5 billion for the first
three quarters of 2012, compared with $5.3 billion in the year
earlier period, Thomson Reuters data shows. Australia is Asia's
fourth-biggest private equity market by deal volumes, according
to the data.
Deals that got derailed this year include Pacific Equity
Partners' A$1.4 billion sale of its share registry business Link
Group, TPG Capital Management LP's and Bain Capital's
bids for listed surfwear maker Billabong International,
and Brambles Ltd's cancelled sale of its $2 billion
Recall information management business, which had attracted
interest from buyout firms.
But some deals are still in the works. Blackstone Group
is in talks to buy Ingham Chickens in a potential $1.5
billion buyout, according to a source with direct knowledge of
the situation. Blackstone has declined to comment on the talks
and Ingham has declined to disclose details regarding bidders.
Citigroup analysts estimate the sale of Leighton's NextGen
business could bring in up to A$870 million, while Morgan
Stanley expects a sale price between A$625 million and A$750
million. Leighton has $295 million of debt maturing in July
2014, according to Thomson Reuters data.
Private equity interest in NextGen comes at a time when the
Leighton unit has been recording strong growth in its core
earnings. Its earnings before interest and tax (EBIT) have more
than quadrupled since fiscal year 2009, according to Morgan
It was not immediately clear who else may be among the
short-listed bidders but industry analysts have said Australian
telecommunications firm TPG Telecom was a likely contender.
Senior TPG officials have not denied their interest in the sale.
"There are strict confidentiality agreements which don't
allow us to disclose anything about that, but it will be an
interesting process," TPG Chief Financial Officer Stephen
Banfield told a shareholders' meeting last week.
Analysts said TPG Telecom was the only domestic telecoms
firm that could buy NextGen and gain synergies in its fibre
Macquarie Group is advising Leighton on the sale.