Affinity rivals KKR on Australian telco takeover

The Hong Kong-based buyout firm has made a A$2.2 billion proposal to acquire all shares of Sydney-listed Vocus Group.

Australian telecom operator Vocus Group has received a takeover proposal from Hong Kong-based private equity firm Affinity Equity Partners. It is the second bid for the group, following KKR’s A$2.2 billion ($1.68 billion; €1.47 billion) move last month

Affinity’s proposal, which Vocus said is preliminary, indicative and non-binding, values the shares at A$3.5 each, similar to KKR’s offer. This price is only slightly more than one-third of the stock’s 52-week high of about A$9.

The Australian company said the proposal is subject to due diligence and conditional on several other matters, such as the KKR proposal. Vocus’s board suggested granting Affinity and KKR the right to conduct due diligence on a non-exclusive basis to see whether a binding transaction can be agreed. 

The board also recommended going through a formal process to evaluate if a change of control offer, at a price and on terms that the board would recommend, can be secured. 

The company added that it does not intend to comment further unless and until a recommended offer is secured. Vocus’s shareholders are advised not to take any action for now. 

Vocus owns and operates internet networks in Australia and New Zealand. Late last year, the company agreed to team up with Alcatel Submarine Networks to build the Australia-Singapore Cable, a 4,600km-long submarine cable system linking Australia’s eastern coast to Singapore and Indonesia. 

A spin-off from UBS Capital Asia Pacific, Affinity is now an independently owned fund manager. It focuses on private equity deals in lower-risk, advanced economies of Asia, advising and managing about $8 billion in assets – including its latest $3.8 billion Affinity Asia Pacific Fund IV.