East Capital Explorer AB (ECEX) is to sell its entire 63 per cent stake in Starman Group, the pan-Baltic cable TV and broadband provider, to Providence Equity.
The transaction, which will result in an exit gain for ECEX of at least EUR35 million, corresponding to a gross IRR in excess of 30 per cent, will consist of an upfront cash consideration of approximately EUR 81m with the potential for an additional earn-out of up to EUR5 million payable in 2017. The transaction will represent an implied total enterprise value of approximately EUR210 million.
East Capital Explorer acquired a majority stake in the Estonian operator Starman in 2013. Since then, Starman’s revenues and EBITDA have grown by an average of 11 percent per year. In February 2015, East Capital Explorer made an add-on investment in Starman which enabled Starman to acquire its Lithuanian peer Cgates, thereby creating the first pan-Baltic cable TV and broadband provider. The two equity investments amounted to a total of EUR46 million.
Mia Jurke, CEO of East Capital Explorer, says: “This transaction will crystallise significant value for our shareholders, and prove our past three years’ strategic focus on investments in private equity and real estate in the Baltic countries. We welcome the financial flexibility that this transaction will give us. We believe that our strategic investment focus and a continued use of available tools such as buybacks, dividends and share redemptions, can altogether increase shareholder value.”
Kestutis Sasnauskas, Head of Private Equity and Real Estate at East Capital, says: “I am pleased to announce this, which will be one of the largest private equity transactions in the Baltics to date. We have strengthened investments in technology, product development and market consolidation, and worked closely together with the management team. This has enabled Starman to outgrow its competitors and transform from a national challenger into a regional leader. We are confident that Providence will enable Starman to continue to develop successfully in this exciting and fast evolving market.”
Aivo Adamson, CEO of Starman Group, says: “Starman has in recent years intensively focused on growth and expansion in our Baltic home market, supported by East Capital Explorer. We are committed to offering our clients innovative and superior telecom and entertainment solutions. We are confident that with the addition of a strong financial investor, with over 25 years of experience of telecom investments, as our new majority owner, we can continue on the path of innovation and growth in the Baltic region.”
Karim Tabet, Managing Director at Providence, says: “The acquisition of Starman Group would represent Providence’s continued commitment to investing in infrastructure to support the delivery of high quality media and communication services in the Baltic region.” Robert Sudo, Managing Director at Providence, added; “We look forward to supporting the company’s strategy to improve customer experience and provide access to best-in-class services and content.”
