Italian funds buy fibre optic firm for €436m

F2i and IMI Investimenti have purchased Metroweb for an enterprise value of €436m. The sellers are Sterling Capital Partners and A2A. Intesa Sanpaolo, Mediobanca, Santander, Societe Generale and Centrobanca will provide debt for the deal, set to close at the end of June.

Italian infrastructure fund F2i and IMI Investimenti, the private equity arm of local bank Intesa Sanpaolo, have entered into an agreement to buy Metroweb, the owner of a fibre optic network in Milan and Lombardy.

The consortium of Italian investors – 87.5 percent owned by F2i with the remaining 12.5 percent in the hands of IMI Investimenti –has  agreed to buy Metroweb for an enterprise value of €436 million, more than 10x the firm’s 2010 earnings before interest, tax, depreciation and amortisation (EBITDA). 

The sellers were UK private equity firm Stirling Square Capital Partners, which held 76.5 percent of Metroweb, and Italian utility A2A, which owned 23.5 percent of the fibre optic firm. They acquired the company in 2006. 

A2A said it will be paid €53 million in cash for its shareholding in Metroweb, representing a gain of some €38 million. 

In addition, A2A will continue to hold a convertible bond in Metroweb – with rights of sale by November 30, 2013 – that, if exercised, will enable A2A to maintain a 25 percent holding in Metroweb. Stirling Square Capital Partners did not say how much it will gain from the transaction. 

Intesa Sanpaolo, Mediobanca, Santander, Societe Genereale and Centrobanca will provide debt for the acquisition, which is expected to reach financial close by the end of June. F2i and IMI Investimenti said they might sell a minority stake in Metroweb to Italian broadband provider Fastweb, Metroweb’s main client, with which it does over 80 percent of its business.

Metroweb owns and manages a fibre optic network serving more than 2.7 million people and comprising over 7,200 kilometres of cables. The firm earns its keep leasing its fibre optic network to internet providers, telecommunication companies and government institutions. In 2010, Metroweb recorded overall proceeds of €51.5 million.

The sale of Metroweb attracted attention from several infrastructure funds, including funds managed by French investors AXA Private Equity, Antin Infrastructure Partners and Cube Infrastructure.