PE Firms to Bank $3.7B in Exit from Denmark’s TDC

The majority owners of Denmark’s TDC will earn up to $3.7 billion in a partial exit from the company, Reuters reported. Private equity firms Apax Partners, Blackstone Group, Kohlberg Kravis Roberts & Co., Permira Advisers and Providence Equity Partners plan to sell a third of the telecoms group, through a share buyback and public offering. The private equity consortium will raise $2.19 billion from the sale, provided an overallotment option is exercised, Reuters said. The firms will raise an additional $1.5 billion through a share buyback by TDC.

(Reuters) – The private equity owners of Denmark’s TDC (TDC.CO) will bank up to $3.7 billion from the sale of a third of the telecoms group, through a share buyback and one of Europe’s biggest public offerings of 2010.

The share sale is the latest example of private equity firms making the most of a relative resurgence in demand for equity offerings in Europe to cash in on investments they made several years ago, and follows a successful debut offering by Danish jeweller Pandora (PNDORA.CO) in October.

The partial exit of Apax Partners, Blackstone Group (BX.N), Kohlberg Kravis Roberts (KKR.N), Permira Advisers [PERM.UL] and Providence Equity Partners effectively relaunches TDC on the Copenhagen bourse. They originally bought the firm in 2005 in what was then the largest European leveraged buyout in history.

The majority owners said on Thursday they had priced the offering of 210 million shares at 51 crowns per share, the middle of an earlier narrowed range of 50-52 crowns per share, confirming a Reuters report on Wednesday.

The private equity consortium stand to raise 12.3 billion crowns ($2.19 billion) from the sale if an overallotment option of 31.5 million shares is exercised.

They will also pocket 8.7 billion crowns from a share buyback by TDC, expected to settle on Dec. 13-15, which is part of a plan to releverage the company.

FURTHER SHARE SALES?

Together the sale and share buyback by TDC will cut the stake held by the consortium to about 55.4 percent from 87.9 percent — if the overallotment is fully exercised. And they are expected to sell down their remaining stakes in the future.

“The free-float looks a little low which could create high demand for the stock in the short term,” said Swedbank analyst Sven Skold.

“I am sure they will want to sell all of their shares (eventually). They have been in the investment for years, and they have carried out a lot of changes. It has been a very good investment for them.”

Around 10,000 investors bought shares in the offering, the company said, with 16 percent being sold to retail investors.

A source close to the deal said it saw good demand from both Nordic and international institutions, and investors were attracted by the stock’s high dividend yield of 8.5 percent.

“The deal was pretty popular in Scandinavia because they don’t have that many high-yielding dividend stocks,” said the manager of a global telecoms fund, who added that the offer would have attracted better international interest if it had been priced below 50 crowns.

The sale ranks fourth in Europe in 2010 behind Italian renewable energy firm Enel Green Power’s EGPW.MI $3.6 billion IPO, Polish insurer PZU’s PZU.WA $2.7 billion sale and Russian aluminium group Rusal’s (0486.HK) worth $2.2 billion.

Shares in TDC, which will have a market capitalisation of around $7.4 billion after the share buyback, opened at 50.90 crowns and by 0947 GMT were trading down 3.9 percent at 50 crowns.

(Additional reporting by Mette Fraende and Shida Chayesteh in Copenhagen and Chris Vellacott in London; Editing by Dan Lalor and Erica Billingham) ($1= 5.607 Danish crowns)