CVC set to exit Indonesia's Link Net
CVC Capital Partners is poised to complete its exit from Indonesia broadband and cable TV provider Link Net – in which it has been an investor since 2011 – through a trade sale to MNC Vision Network.
Lippo Group-owned First Media said in a filing that it had entered into an initial agreement to sell its 27.4% stake in Link Net to MNC. A separate filing from MNC, operator of Indonesia’s largest satellite television network, indicated that it would buy positions in Link Net held by First Media and CVC. The PE firm currently owns approximately 35%.
No details were given as to the size of the deal. Based on Link Net’s November 29 closing price of IDR4,180, the company is worth around IDR11.9 trillion ($842 million). This would put CVC’s interest at IDR4.16 trillion. The stock reached as high as IDR7,200 in the weeks following its June 2014 IPO, but hasn’t traded above IDR5,650 in two years.
CVC invested $275 million in Link Net through a bond and share issue in 2011, leveraging ties to Lippo Group – which is controlled by the Riady family – that had secured a buyout of Matahari Department Store the previous year. The private equity firm took a 33.94% stake, with the option of increasing it to the 49% foreign ownership ceiling.
This option was exercised when Link Net went public. The company raised IDR487 billion as First Media sold 304.3 million shares at IDR1,600 apiece, reducing its stake from 66.06% to 56.06%. Four months later, the two shareholders sold a 30% interest for IDR5.5 trillion. CVC reduced its holding from 49% to 33.4%. As of December 2018, the GP owned 34.96% due to changes in treasury stocks.
Link Net operates fiber optic and coaxial cable networks that serve 2.2 million homes. It has 595,000 broadband internet subscribers, 575,000 home cable subscribers, and 2.45 million corporate customers. Revenue came to IDR3.7 trillion in 2018, up from IDR3.4 trillion the previous year. Over the same period, net profit fell from IDR1 trillion to IDR798 billion.
Earlier this year, CVC secured a partial exit from another Indonesian portfolio company, sports retailer MAP Aktif Adiperkasa. It generated proceeds of approximately IDR4.1 trillion through a share sell-down.
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