Nordic Capital Drops Out of Com Helm Race

Nordic Capital has dropped out of the running to buy Swedish cable television operator Com Hem, Reuters reported. Buyout shop CVC dropped out earlier in the process. Final bids are due this week, and Cinven and rival BC Partners are expected to table binding bids for the cable firm, Reuters wrote. The company is expected to fetch as much as 18 billion Swedish Crowns ($2.7 billion), Reuters said.

(Reuters) – Private equity firm Nordic Capital has pulled out of the race to buy Sweden’s largest cable television operator Com Hem, leaving its bid partner Cinven to go it alone, people familiar with the situation said.

Nordic is the latest private equity firm to pull out of the auction before final bids are due later this week, with CVC having dropped out earlier in the process.

Both Cinven and rival BC Partners are expected to table binding bids for the cable firm, which serves more than 800,000 customers across Sweden, and sellers Carlyle Group and Providence hope could fetch as much as 18 billion Swedish Crowns ($2.7 billion), the people said.

Another unnamed corporate rival is also eyeing the company, two of the people said, though it is unclear whether or not that company will bid.

The sellers have also been considering an initial public offering and have been talking to banks about advising on that process should it fail to agree a deal at the right price, one of the people said.

The late exit of Nordic echoes Clayton, Dubilier and Rice’s recent retirement from the auction for Swedish alarms firm Securitas Direct, leaving its partners Carlyle and Stanley Black & Decker to bid.

In the end, the rival team of Bain and Hellman & Friedman agreed the deal, Europe’s largest buyout this year.

Cable companies have been attractive targets for private equity firms, with Cinven and BC Partners both boasting experience with some of the largest businesses in the sector.

Cinven owns both Ziggo in the Netherlands and France’s Completel. BC owned Germany’s Unitymedia, which it last year sold to Liberty Global .

Com Hem had revenues of 4.32 billion crowns in 2010 and earnings before interest, tax, depreciation and amortisation (EBITDA) of 1.85 billion. It provides digital TV, broadband and telephony to more than 800,000 customers across Sweden.

Any private equity buyer would need to find about 500 million euros ($710 million) in equity, with up to 6.5 times leverage available for a deal, one of the people said.

The deal also pits two firms at very distinct points in their investment cycles. For BC, a deal would mark its first investment out of its latest buyout fund, which it is still in the process of raising.

Cinven, meanwhile, is coming towards the end of its fourth buyout fund — a point at which many private equity firms want to make smaller equity investments and take less risky bets.

The private equity firms named either declined to comment or were unavailable for comment. ($1=6.587 Swedish Kronas=0.702 Euros) (Reporting by Simon Meads and Sven Nordenstam; Editing by Mike Nesbit)