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CPPIB invests $200m in Hong Kong broadband firm

The Toronto-based pension fund manager has acquired a 17% stake in HKBN, Hong Kong’s second-biggest broadband and fixed line telecoms company.

The Canada Pension Plan Investment Board (CPPIB) announced yesterday it had acquired 172,382,000 ordinary shares of HKBN Ltd (HKBN) at a price of HK$9 per ordinary share as part of HKBN's initial public offering (IPO). CPPIB invested HK$1.551 billion (€188.7 million; $200.0 million), representing an approximate 17 percent stake.

The IPO is said to be the second-biggest listing in the Asia Pacific region this year after Thai telecommunications operator Jasmine International’s listing of its broadband internet business that raised $1.13 billion in early February. Private equity firm CVC Capital Partners, which owns a 70.7 per cent stake in the company, HKBN’s management and other investors offered 645 million existing shares at $9 a piece, offering an expected yield of 5.4 per cent.

“We are pleased to be making this relationship investment in HKBN, one of the leading providers of broadband services in Hong Kong,” said CPPIB managing director and head of relationship investments, Scott Lawrence.

“As a cornerstone investor, we are delighted to begin a long-term partnership with HKBN's talented management team, and look forward to working together to generate growth for the company,” added Lawrence.

“This investment fits well with Relationship Investments' focus on providing strategic, long-term capital to leading public companies, like HKBN, where CPPIB can participate in the future success of the company and help create greater value through an ongoing partnership,” said Lawrence.

Founded in 1999, the Richard Li-owned company is the second-largest residential broadband service provider by number of subscriptions in Hong Kong. It owns and operates one of the largest fibre optic networks in Hong Kong, reaching more than 2.1 million residential homes and 1,900 commercial buildings.

Goldman Sachs, JPMorgan and UBS were the bookrunners of the IPO.

CVC Capital Partners bought HKBN from Hong Kong Television Network in May 2012 for HK$4.9 billion. The European private equity firm raised $40 million in August by selling an undisclosed amount of ordinary and preference shares to a unit of Singapore’s sovereign wealth fund GIC for an 11.3 per cent stake and another $29 million from Carlyle Group for 8.14 per cent.