Exit nets 40% IRR for BC Partners

Apollo- and BC-backed Unitymedia, the cable platform that owns the rights to the German football league, has been sold to a US player for €3.5bn.

Unitymedia, a German cable television provider owned by BC Partners and Apollo, is to be sold to US group Liberty Global for €3.5 billion. The deal will net BC Partners, which first invested in the company seven years ago, an internal rate of return of around 40 percent, according to a source close to the process.

Bundesliga: A Unitymedia offering

BC‘s original investment was made in 2003, when it pipped rival private equity buyers – including US firm Apollo – to the €510 million acquisition of Deutsche Bank-owned Tele Columbus.

In 2005 BC merged Tele Columbus with another German cable business, Apollo-owned Iesy, to form the country’s second largest cable company behind Kabel Deutschland. BC took a 35 percent stake in the resulting entity, named Unitymedia, and Apollo took 29 percent, with the remainder being shared between the company’s management and a selection of hedge funds.

The trade sale of the entire business to US operator Liberty implies an equity value of the business of €2 billion and a total enterprise value of €3.5 billion, which includes €1.5 billion in debt, according to a statement from the company. It did not disclose the names of lenders or types of debt involved in the deal.

A successful exit for BC provides the firm with a boost as it plots the raising of its next fund, likely to be marketed in the second half of 2010.

Raymond Svider, co-chairman of BC Partners, led the investment. “Highlights for us have included the investment of over €750 million into the network over the last four years to modernize and enable triple play services, as well as the acquisition of the rights to broadcast the German Bundesliga in 2006 and the creation of Arena, Germany’s second largest satellite pay-TV platform,” he said in a statement.

Apollo was unavailable to comment at press time.