Providence Halves Its Stake in Kabel Deutschland

Buyout group Providence Equity Partners earned 760 million euros ($1.06 billion) by selling half of its stake in German cable operator Kabel Deutschland, Reuters reported. The firm reduced its stake to 22% from 43.7%.

(Reuters) – Buyout group Providence Equity Partners fetched 760 million euros ($1.06 billion) by halving its stake in Kabel Deutschland (KD8Gn.DE), further cutting ties to Germany’s No.1 cable operator.

Kabel Deutschland said on Friday Luxembourg-based Cable Holding, backed by Providence Equity, placed 20 million shares at 38 euros apiece to increase Kabel Deutschland’s freefloat, reducing its stake to 22 percent from 43.7 percent.

Kabel Deutschland said the move aimed at “increasing liquidity in the stock and strengthening the company’s MDAX .MDAXI ranking”, a step that Kabel’s Chief Executive Adrian von Hammerstein had welcomed in the past.

“In the long term, this will not have much impact, but in the short term this significant share sale could discourage investors,” a Frankfurt-based trader said.

At 0921 GMT, shares in Kabel Deutschland were 4.6 percent lower at 38 euros, at the bottom of Frankfurt’s midcap index.

Providence, which said it would keep its remaining stake in Kabel Deutschland for at least another three months, in September 2010 had already lowered its stake in the company, which floated about a year ago, by selling a 17 percent stake.

(Reporting by Christoph Steitz; additional reporting by Josie Cox)