MBK, TPG to buy Wharf’s telecom business for $1.2b
MBK Partners and TPG Capital have agreed to acquire Hong Kong telecom services provider Wharf T&T from its parent company The Wharf Holdings for HK$9.5 billion ($1.2 billion).
The two investors will buy the assets through a newly established and jointly owned special purpose vehicle, according to a filing. Debtwire reported that the transaction is supported by $550 million in senior loans and $100 million in mezzanine financing, amounting to leverage of 6.5x, based on EBITDA of around $100 million.
Wharf T&T is the second-largest fixed line service provider for business customers in Hong Kong, with a fiber-optic network covering approximately 90% of the commercial market. The parent company said in March that it was conducting a strategic review of its communications, media and entertainment (CME) segment, which accounted for 9% of group revenue and 1% of operating profit last year.
Owned by Hong Kong billionaire Peter Woo, The Wharf Holdings focuses on commercial property development and investment in mainland China and Hong Kong. It generated HK$40.9 billion in revenue last year, up from HK$38.1 billion in 2014, while net profit dropped 55% year-on-year to HK$16 billion in 2015. The group has yet to complete a review on its pay-TV division i-Cable Communication, which is also part of the CME business.
"We are very impressed with Wharf T&T's successful track record of establishing a client base of over 50,000 enterprises in Hong Kong and of building a leading ubiquitous fiber network in Hong Kong, reflecting the quality and commitment of its management team and employees," Teck Chien Kong, a partner of MBK, said in a release.
MBK has a long track record investing in Asian technology, media and telecommunication (TMT) assets, having backed cable TV operator China Network Systems and television network Gala TV in Taiwan, Korean cable TV operator C&M and Japanese software maker Yayoi. TPG's previous TMT exposure in Asia includes telecom services provider Asia Netcom (now known as Pacnet) and Japan Telecom (now known as Softbank Telecom).
The Wharf T&T deal is expected to close in November.
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