PAI teams up with Inveready to buy Avatel for $550 million

Searchlight is competing in the tender with a consortium formed by a venture capital fund and a Spanish management company led by Josep Maria Echarri. Telefonica and HIG are also interested.

French venture capital manager PAI Partnersthrough its middle market fund, has entered into a partnership with a Spanish fund Inverideeheaded by Josep Maria EcharriFor joint purchase of Avatel Telecomfifth telecom operatorfrom Spain, with cost more than 550 million euros, according to several market sources consulted by EXPANSIÓN.

The Franco-Spanish consortium is the most advanced in the sales process it coordinates. Santander Bank, What could be decided before the beginning of next August, although there are no guarantees that he will perform the operation. In the process he was baptized under a code name Pangea Project and advanced this way on January 31st, PAI Partners and Inveready compete with US fund Searchlight, is famous in Spain for being Mediapro creditor.

Telefonica and HIG Capital They were also interested in buying Avatel, Bloomberg reported, although they would be further behind in the race to acquire the Spanish telecoms operator. is currently controlled by its founders, Group CEO Ignacio Aguirre and President Victor Rodriguez, as well as Vice President Jorge Gomez.

The parties did not comment on this issue.

Seven times EBITDA

Candidates seek to acquire 100% of Avatel, the company’s value (enterprise value) is in process in more than 550 million euroswhat does it translate approximately seven times the group’s EBITDAwhich currently amounts to around 80 million euros, according to sources consulted.

The deal is close to completion as soon as merger of Orange and MásMóvil and what led to the creation of the group Masorange, which has changed the telecommunications map in Spain and could trigger a large number of transactions that will now reconfigure the sector. The largest beneficiary of the merger was a Romanian company Digitalwhich was done using legal remedies (concessions that Orange and MásMóvil were forced into by the competition authorities) during the operation as this newspaper progressed.

Avatel Telecom is the fifth telecom operator in terms of billing after Movistar, Masorange, Vodafone and Digi.. According to the latest publicly available data, the company earned €156.87 million in the first half of 2023, up 15.2% on the same period in 2022, which year-on-year forecasts it will top €315 million last year , which is far from last year’s figure. $642 million Digi introduced in 2023.

The Costa del Sol-based operator has grown over the past two decades, largely thanks to acquisition of more than a hundred small and medium-sized local operators. The firm continued its expansion in 2023 with the purchase of 25 new operators in different parts of the country for €85 million. In early 2024, Avatel Telecom reported that it had a total of 155 integrated operators since launching its inorganic growth plan. including the 25th of 2023.

Avatel originated in regions historically characterized by a strong presence of local operators such as Andalusia, Valencian Community and Murcia. With the emergence of new companies Avatel has expanded its presence in new regions such as Galicia, Extremadura and Aragon.

Avatel was close to giving Apollo a stake in its joint purchase of Lyntia Access, now Elanta, from Antin in operation he had also previously studied AsterionNeither transaction was completed and Elanta is now looking for a buyer through UBS.

Regulatory risk reduces Telefonica’s opportunities

Telefonica is one of four companies interested in acquiring Avatel, thanks to the synergies it would gain from the transaction after important state subsidies granted to the regional operator for the deployment of a rural network. But the significant regulatory risk that its candidacy entails limits the former monopoly’s options in the bid. This condition requires that the possible purchase of Avatel be approved by future European antitrust authorities, whose profile is still unknown and which took more than two years to rule on the merger of Orange and MásMóvil, setting serious conditions. The funds’ offers therefore represent less risk.

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