Banks preparing for TEEG sell-off

TEEG is said to be generating over $200m of annual earnings before interest, tax, depreciation and amortisation.

Investment banks are pitching hard on sale opportunities for private equity firms, and one of the businesses in focus is The Entertainment and Education Group.

The $2bn-plus company counts the amusement arcade operator Timezone within its stable.

DataRoom understands that banks are positioning themselves for when Quadrant decides to sell the operation.

One keeping close to TEEG and likely to be on the ticket is Jefferies, but it has not been officially appointed.

Quadrant has been working hard to grow the company and the understanding is that a Southeast Asian transaction is in train, so any deal is likely come after it has bedded down that acquisition.

TEEG is said to be generating over $200m of annual earnings before interest, tax, depreciation and amortisation, and about $600m of annual revenue. That implies a price tag of at least $2bn.

Sources say a number of prospective buyers have been asked about their interest in an acquisition.

Quadrant Private Equity’s playbook is that it likes to sound out the market to determine if a buyer is keen on one of its companies and gauge the price they may be prepared to pay.

From there, they either embark on a bilateral deal or launch a sale process to determine whether there’s a higher offer out there.

This column reported last year that global buyout funds including Blackstone, Carlyle and CVC were running the ruler over TEEG.

But sources at the time said Quadrant was eager to retain it for some time to capitalise on the growing demand in the Indian market.

Timezone is said to be doing a roaring trade in India.

The business ticks the box for Blackstone, because it plays to one of its key investment thematics: entertainment.

The group’s earnings are still mostly skewed towards the Australia market and the plan is to make the business more global.

When the business was for sale in the past, major buyout funds were also targeted, including TPG Capital, which purchased Timezone’s rival Funlab from Next Capital for $250m at the end of 2020.

Owners Quadrant and the Steinberg family had earlier refinanced TEEG: Goldman Sachs offloaded some debt and Deutsche Bank and Canyon Partners became lenders.

Quadrant purchased a 50 per cent interest in Timezone in 2017 and folded it into the TEEG company it created.