Update Post: November 28, 2023 11:07 pm
More capital for the dance of operations in the Spanish telecom sector. In the year of the merger of Orange and Másmóvil, the potential sale of Vodafone and the entry of Arab partners in Telefónica, the venture capital manager Inveready launches a new fund specialized in this sector of 75 million euros. The still shareholder of Másmóvil intends to invest in operators or in the exploitation of “commercial infrastructure projects.” In addition to the consolidation of large network owners, it is also expected that there will continue to be more transactions in the wholesale fiber sector.
The fund is called Telecom Opportunities and has one year ahead to raise those 75 million euros. That is the total investment objective, but the import could be reduced or increased due to factors such as “the economic situation and investment opportunities”, as reflected in the prospectus presented to the National Securities Market Commission (CNMV). It is an amount significantly higher than the 50 million euros that was raised to support projects in the biotechnology sector at the end of last year.
The ultimate goal will be to invest in companies focused on the “commercial exploitation of infrastructure related to telecommunications in a ‘retail’ or wholesale model.” And the geographical area in which it will operate will be mainly the Iberian Peninsula, which is where today it concentrates all of the investments that the manager has accumulated in the telecommunications sector. Inveready is no stranger to this market, as it has several companies in its current portfolio.
The most relevant investee is Másmóvil. He was one of the initial investors. One of his main partners, Josep María Echarri, became the financial brain of the fourth operator and was behind the growth strategy through acquisitions. His partial departure from the company led by Meinrad Spenger made it possible to accumulate large capital gains in several of his vehicles. Today it continues to control 22.4 million shares of the British parent company that controls the telecom company, which represents 1.2% of the total. He coexists with the three large funds (Providence, KKR and Cinven) and with other investors who remained after the public acquisition offer (takeover bid) of 2021 such as the co-founder of Ibercom, José Eulalio Poza, or the Ybarra family.
The Spanish manager has other investments in the sector that have had very different returns. One is the Portuguese subsidiary of Másmóvil, which was sold at the end of last year to Vodafone but whose authorization is still in the hands of the country’s competition regulator. The largest in terms of investment is Parlem Telecom. The firm has injected capital or debt in different transactions in recent years. The last was in December, when it contributed 11 million to finance purchases and provide liquidity. Today it holds almost 11%, being the second external partner only behind Ona Capital. Two other investees were sold in the past, such as VozTelecom, which was acquired by the British company Gamma for 19.2 million, or Kubi Wireless, which was incorporated into the perimeter of Eurona for 10 million.
This movement in the investment segment occurs right in the midst of operations in the sector, immersed in continuous boiling. In the case of Másmóvil, it is immersed in the merger operation through a 50% joint venture with Orange. In this transaction, Inveready would remain the same as the rest of the shareholders, waiting for an IPO starting in the third year. But this is not the only operation that moves between ‘traditional’ operators. The negotiation of compensatory measures (remedies) with Brussels continues.
Lots of corporate movement
Vodafone is in talks with different investment funds for the total or partial sale of its business in Spain, after a “strategic review” of the assets began in the second quarter of the year. Last week, negotiations with the British vehicle Zegona – former owner of Euskaltel – for this acquisition emerged. As if that were not enough, there is the entry of the first external partner beyond Caixabank and BBVA in Telefónica, with the landing of the Saudi STC.
On the wholesale infrastructure side, which would also be a target for Inveready, there has also been a lot of movement in recent years with the formation of several groups such as Lyntia or Onivia or Bluevía, the ‘netco’ created by Telefónica together with the Vauban funds and Crédit Agricole to manage rural fiber in Spain. All analysts assume that there will be another consolidation process in this area.