Hong Kong Broadband's PE backers make partial exit
CVC Capital Partners and its co-investors, AlpInvest Partners and GIC Private, have sold a 7.6% stake in Hong Kong Broadband (HKBN), the internet services provider they acquired in 2012 and took public in March.
The investors sold 76.3 million shares following the expiry of a six-month post-IPO lock-up period, HKBN said in a regulatory filing. Based on current market prices, the stake is worth approximately HK$679 million ($87.6 million), although it was likely sold at a small discount. HKBN's stock is currently trading at around HK$8.90, having jumped 6.4% on September 23.
CVC bought HKBN from Hong Kong Television Network (then City Telecom) in early 2012 for HK$4.87 billion. The PE firm subsequently sold a $40 million stake to GIC and a $29 million stake to AlpInvest.
The company raised HK$5.8 billion in its IPO after pricing the deal at the top end of the indicative range. CVC held a 68.44% interest in HKBN ahead of the IPO. It sold 539.2 million shares in offering, realizing proceeds of HK$4.85 billion and reducing its stake to 14.44%. This fell to 5.95% after the over-allotment option was fully exercised, netting the PE firm a further HK$767 million.
GIC saw its stake fall from 10.93% to 9.73% following the IPO and over-allotment offering, while AlpInvest went from 7.87% to 0.68%. They received around HK$749 million between them. Canada Pension Plan Investment Board (CPPIB) came in as a cornerstone investor in the IPO, paying $200 million for a 17.14% interest in the company.
HKBN is the number two internet service provider in Hong Kong. When CVC invested, the company had increased subscriber numbers from 683,000 in 2007 to 1.3 million by 2012. The GP introduced several initiatives to grow the business, including expanding the firm's Wi-Fi coverage to 15,000 hot spots across Hong Kong and the bolt-on acquisition of Y5Zone.
As of November 2014, HKBN had 2.1 million residential subscribers, or a 35% market share, and 1,900 commercial subscribers. It recorded turnover of HK$2.13 billion in 2014, up from HK$1.94 billion the previous year. A net loss of HK$138.9 million was also turned into a profit of HK$53.5 million.
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