We have quite a selection of news for you this morning. We open with an update on KKR’s bid for Telecom Italia’s fixed-line network assets.
In confirmed deals, we have Synova, a European mid-market investor, receiving a passive minority investment from Bonaccord Capital Partners and Carlyle, CIC and CVC agreeing on the sale of Neptune Energy to Eni and Vår Energi.
Elsewhere, we have a report from DC Advisory, an international investment bank, on the European debt outlook.
Let’s start with a potential deal that is now a one step closer to its final stages. Telecom Italia (TIM) announced that the offer submitted by KKR for its fixed-line network assets is preferable in terms of executability and timing. The offer is also and higher than the competing offer submitted by the consortium formed by CDP Equity and Macquarie Infrastructure and Real Assets. TIM has therefore entered exclusive talks with KKR over the deal.
TIM’s fixed-line network assets, including FiberCop and Sparkle, are to be merged into a soon-to-be established company NetCo.
The deadline for a binding offer is at the end of September.
KKR might encounter some resistance for its bid. Vivendi, a French media group, plans to fight the proposal by TIM to sell its fixed-line assets to KKR, sources close to the matter told the Financial Times. Vivendi holds a 23.75 percent stake in TIM and more than 17 percent of its voting rights.
A source told the FT that separating the network from the rest of the company would make it a “dead man walking”.
You can catch up on our previous coverage on KKR’s interest in TIM here.
Next, we have an energy deal. Neptune Energy Group – an exploration and production company owned by Carlyle Group, China Investment Corporation, CVC Capital Partners and management – is to be sold to Eni and Vår Energi.
Founded in 2015, Neptune has gas-oriented assets and operations in Western Europe, North Africa, Indonesia and Australia.
Eni, an Italian multinational energy company headquartered in Rome, will acquire Neptune’s entire portfolio except its operations in Germany and Norway, dubbed Neptune Global. The enterprise value will be around $2.6 billion and will be funded through available liquidity.
Neptune Global reported annual revenues in 2022 of around $1.22 billion and EBITDAX of around $950 million. As of 31 December, the net debt of Neptune Global, pro forma for the sale of the Norway business, was around $500 million.
Vår, a Sandnes-headquartered upstream oil and gas company on the Norwegian continental shelf, will acquire the Norwegian operations under a separate share purchase agreement.
We reported on Eni entering preliminary talks to buy Neptune at the start of December. You can catch up on that here.
Mid-market firm Synova has sold a passive minority stake in the firm to Bonaccord Capital Partners.
London-headquartered Synova invests across software and data, health, tech-enabled services and financial services sectors.
Bonaccord will support Synova through its global institutional network while providing additional capital for Synova’s growth plans, according to a press release.
“Synova has established itself as a leading private equity firm built on the remarkable entrepreneurial spirit of the firm’s founders,” said Ajay Chitkara, managing partner at Bonaccord. “Synova’s proactive origination, deep domain expertise, and proven value creation capabilities has allowed them to deliver exceptional results to investors. We are proud to partner with the Synova team in support of their long-term platform initiatives as they continue to be the partner of choice within their high-growth verticals.”
Bonaccord, headquartered in New York, is a subsidiary of P10, a publicly traded private markets firm.
Next up we have a report on the European debt outlook. DC Advisory, an international investment bank, released its latest European Debt Market Monitor for Q1 2023. Let’s take a look at some highlights.
Overall, the report found that debt issuance was “still very much dominated by refinancing and add-ons to fund platform M&A”.
In the DACH region, deal activity decreased in Q1 2023 compared to Q4 2022, according to the report. Key debt metrics, such as fees, margins, base rates and hedging costs, continued to increase, leading to record costs for companies. Despite this, the report noted that deal flow has been increasing since March, albeit “second tier quality” assets. “Should macro pressures continue to ease, we expect sponsors will be more prepared to launch processes with a view to execute while markets remain stable, contributing to increased deal flow next quarter,” said Ari Winarto, a managing director at DC Advisory.
Another area that saw a decrease in lending deal flow was Spain, with a reduction of 18 percent of deal volume compared with Q4 2022. Lenders remain cautious and underwriting appetite from banks remains low, the report said, adding that credit funds continue to provide an attractive funding alternative.
Despite macroeconomic and geopolitical challenges, there was a 19 percent increase in deal volume with Italian involvement in Q1 2023, compared with the same quarter in 2022, according to the report. DC Advisory expects Italy to grow in terms of GDP, as it benefits from increased national and foreign demand, particularly in the industrials sector.