TA makes partial exit as Speedcast IPO raises $139m

The company was trading at A$2.08 by mid-afternoon on Wednesday, down nearly 1%, after closing up 8.2% at A$2.11 on debut the previous day. Speedcast sold 76.5 million shares in the IPO at A$1.96 apiece. The offer comprised 26.3 million new shares and 50.2 million existing shares.

TA owned 81.6% of the company ahead of the offering with the rest held by the CEO and management team. The private equity firm now has 29.5 million shares, or a 24.6% stake, valued at around A$58 million based on the market capitalization of A$235.5 million cited in the prospectus.

TA and company management have between them received A$92.9 million from the share sale, with most of this going to the private equity firm. The rest of the proceeds will be used to pay down bank debt, fund acquisition-related payments, cover other costs and for working capital.

TA bought SpeedCast from Asia Satellite Telecommunications two years ago for $32.2 million and has since completed five bolt-on acquisitions, four of them in Australia. The most recent acquisition was wireless and broadband specialist Oceanic Broadband in June, with a view to boosting coverage of the natural resources sector.

The other bolt-ons are SatComms, Pactel, Australia Satellite Communications, and Elektrikom Satellite Services. The latter is based in the Netherlands.

SpeedCast provides network and satellite communications services across 60 countries as well as operating a global maritime network. It is intended to extend services to remote and rural areas beyond the reach of terrestrial networks, or where natural disasters or military conflicts render terrestrial communications unreliable.

The company predominantly uses very small aperture terminal (VSAT) networks with small dishes and antennas that send and receive high focused, high throughput beams from satellites. Speedcast has over 1,000 customers and relies on Australia for 35% of its revenue, followed by maritime areas on 26% and the Pacific Islands on 21%. Customers are predominantly from the telecom, maritime and natural resources sectors.

Pro forma net revenue came to $119 million for the 2014 financial year, up from $111.3 million the previous year. EBITDA grew from $17.5 million to $20.6 million over the same period, while net profit jumped from $3.6 million to $6.1 million. In the year before TA's investment, revenue and EBITDA were $87 million and $9.5 million, respectively.

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