US investment firm I Squared Capital is considering a bid for Hong Kong-listed broadband provider HKBN, which could value the company at up to $1bn, according to a report by Reuters citing two sources familiar with the matter.
The proposed offer by I Squared Capital is expected to surpass an earlier bid from China Mobile, which had offered HKD5.23 per share. However, the sources noted that I Squared Capital is reluctant to go beyond HKD6 per share.
This potential higher bid adds a layer of competition to HKBN’s lengthy buyout process. China Mobile, the world’s largest wireless carrier by subscriber base, is seeking to expand its reach beyond mainland China through this acquisition.
I Squared Capital aims to submit its proposal by the end of January, though sources say the timeline remains uncertain. The Miami-based firm is also exploring the possibility of including a non-cash component in its bid structure, one said.
China Mobile, a state-owned enterprise, made its initial offer in December, valuing HKBN at HKD6.86bn ($882m). The telecommunications giant had previously expressed interest in HKBN nearly two years ago.
I Squared Capital, which manages over $40bn in assets, had also engaged in discussions for a potential HKBN buyout in 2023, but those talks did not result in a deal.
HKBN shares closed at HKD5.25 on Tuesday, reflecting a market capitalisation of $883m. The company has seen its value decline by 65% since April 2020, when its shares reached a five-year peak.
Established in 1999, HKBN provides services including internet, data centres, and WiFi. In 2018, the company acquired fixed-line operator WTT in a $1.34bn deal. Following the acquisition, private equity firms MBK Partners and TPG, WTT’s former owners, became shareholders in HKBN.
The two private equity investors are now looking to exit the company through the ongoing buyout process, according to separate sources.
