A private equity firm is understood to be the solo party in the mix to buy TPG Telecom’s Vision Networks, with Morrison & Co’s Uniti and Macquarie’s Vocus Group both no longer in the competition.
Earlier, Uniti and Vocus were thought to be the only interested buyers.
But the dilemma has been that TPG has been keen for a partial sale of the business, and should it opt to go down that route, the buyer pool is far smaller than it would be if the Australian listed telecommunication company opted to sell Vision Networks as a whole.
One party that may have shown an interest in a stake is Five V Capital and Pacific Equity Partners has looked at similar companies in the past, although it is not thought to be the party in the final mix.
Five V Capital is the company of former CVC Capital executive Adrian MacKenzie and last year purchased a stake in BioPak, a recycled packaging products provider for the food service industry.
It has also hired E&P Corporate Advisory for the sale of Western Australia-based ship agency company Monson.
In 2021, Five V sold its business Education Perfect to Kohlberg Kravis Roberts for up to $450m.
KKR was also understood to have taken a look at Vision, but it was unclear whether it was in serious pursuit.
Expectations were initially high for Vision Networks, with the business pitched as an infrastructure opportunity for superannuation funds, but after groups have carried out due diligence, some say they believe the company is more veering towards the telco side of things rather than infrastructure.
The challenge is that earnings growth could be limited with restrictions on introducing customers other than TPG Telecom.
It is understood that TPG’s preference is to attract a passive investor that takes only part of the business, say 40 to 50 per cent.
Most had earlier estimated the price of Vision at about $1bn, but now it is expected that a buyer would ascribe a valuation for a retail telco provider rather than one for an infrastructure asset.
Vision Networks consists of the assets from former telco provider Neighbourhood Cable, based in regional Victoria, and the TransACT network in Canberra, which have been described as “quite old assets”.
TPG last year announced it had hired Bank of America for a strategic review of the division that connects internet to homes in new developments.
DataRoom believes Vision Networks generates between $55m and $65m in annual earnings before interest, tax, depreciation and amortisation, and about $100m of revenue.
The contest still has some way to go. First-round bids were due around March 7.
One theory is that if only one party is left in the race, TPG Telecom may opt to retain the business.
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