MBK lands 2010’s biggest exit with CNS

The Korean PE firm, launched by former President of Carlyle Asia Partners Michael Kim, was merely one year old, and despite its nascent status, went on to outbid leading global investors, including Kohlberg Kravis Roberts & Co., CVC Capital Partners, TPG Capital, Macquarie Bank and Goldman Sachs, to pick up CNS – Taiwan’s second-largest cable player – in July that following year.

And while the move surprised the industry, few would guess at the time that CNS’ October 2010 sale to the head of Chinese snack food maker Want Want Holdings would earn MBK the biggest exit of the year, at $2.4 billion.

CNS’s sale represents the largest Asian private equity exit of 2010, and the transaction put to rest lingering expectations of a secondary buyout transaction. MBK sold its stake directly to Tsai Eng Meng, Chairman of HKSE-listed Want Want, who has expanded his focus from food products into media, buying Taiwan’s China Times Group and investing in Hong Kong-based Asia Television.

MBK first announced its intention to exit the company in April, with potential secondary buyers such as Permira, Bain Capital, the Blackstone Group, Providence Equity Partners and KKR (again) reportedly brought to the table, as well as corporate suitors. CNS was specifically a strong target because the company claims more than 1.1 million subscribers in a country with 23 million people, as well as 10 system operations and more than 130 television channels.

Furthermore, Taiwan, media spend dipped across disciplines in 2009, but radio and TV remained stable, according to Nielsen Taiwan, largely attributed to inexpensive subscription rates, which are reportedly under $20 a month. Taiwan is one of Asia’s most saturated media markets, but CNS, under MBK’s ownership, has maintained a strong position. “CNS has some level of ARPU upside,” Vivek Couto of Media Partners Asia told AVCJ. “It’s a good asset; a good play on broadband/digital convergence in Taiwan.”

In the event, MBK secured a peak valuation from the buyer. “They’re a domestic investor with potentially strategic ambitions, and they’ve paid a premium for it,” said Couto. “The trading average of cable companies in Asia is 8-10x. This valuation is north of 11x EBITDA; you’re looking at 12-13x.”

In addition to CNS’ strong market position, Taiwan’s economic landscape was also conducive to this transaction. According to AVCJ sources, because Taiwan has a supportive banking environment for larger deals, CNS’s sale process was lush with lenders ready to supply leverage.

Yet, while the deal hasn’t fully closed yet, since it still needs regulatory approval, MBK’s success in securing a top valuation on a major Asian asset stands.

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• Topics
• Greater China
• Media
• Exits
• MBK Partners
• Bain Capital Asia
• Permira Advisers
• KKR
• Providence Equity Partners
• The Blackstone Group
• TPG Capital
• CVC Capital Partners
• The Carlyle Group
• Michael ByungJu Kim