Patrick Drahi /Photo by Emil Salman
French-Israeli telecoms investor Patrick Drahi has been on a roll the last year or so, expanding aggressively his cable and cellphone interests in Europe, Israel and the Dominican Republic.
This week his Luxembourg registered holding company Altice Group, into which all his interests in these areas have been rolled up, announced the commencement of an initial public offering of its shares, both of new shares from the treasury of the company and existing shares from selling shareholders, representing altogether about 25% of the company once listing takes place on the Euronext Exchange in Amsterdam. The sale of existing shares will provide sufficient float for the listing and also reduce debt for their owner, Drahi’s own holding company.
The price of the offering is presently expected to be in a range within US$33.66 (Euros 24.75) and US$42.5 (Euros 31.25) per share. Altice itself will sell a maximum of 30.3 million shares to raise about US$1 billion gross, or Euros 724 million net of Euros 26 million of underwriting costs, professional fees and expenses. This will represent new money to be used to reduce corporate indebtedness.
At 1.5% for the underwriting fee alone, this altogether looks quite an efficient offering, which is being lead managed by Goldman Sachs and Morgan Stanley. Assuming all goes according to plan, admission of the new shares to the Euronext Exchange and commencement of trading should take place on January 31st.
In addition a selling shareholder, which basically is a company called Next LP which owns Altice 100% currently, and is controlled by Patrick Drahi himself, will simultaneously offer up to 22.4 million shares of the company to raise approximately US$750 million gross (Euros 550 million) as part of the offering.
Hence the total value of the IPO, before an additional 15% Underwriter’s over allotment, is about US$1.75 billion (Euros 1.3 billion).
Once the dust settles Drahi’s control vehicle Next LP will then continue to own about 75% of Altice, which will move forward with total, pro forma, net debt of about US$8.4 billion, (Euros 6.2 billion). This debt level is still considerably more than Altice itself recorded in its last accounts, which were for the period ended September 30th, 2013. The reason is the consolidation of a number of holdings immediately prior to the IPO, and the acquisition of recent additional interests as well, including in November the mobile unit owned by Orange in the Dominican Republic, for US$1.4 billion.
While the humble financial analysts of the world will not welcome all the extra work they have to do to keep up with such aggressive expansion by Drahi, as no two period ends will ever be quite comparable it seems, the financial world seems to like the story and it is expected the issue will be a success.
Perhaps therefore we should conclude just by listing what will be in the Altice basket of business interests once the IPO is concluded. Namely, 40% of Numericable in France, 100% of HOT in Israel, 100% of Cabovisao in Portugal, 84% of Numericable in the Benelux countries, 97% of Tricom in the Dominican Republic and 100% of three small cable companies in the French overseas territories. With over US$1.3 billion (Euros 1 billion) of proforma adjusted EBITDA for the nine months to September 30th, 2013 the business appears to have a good deal of depth.
The Altice prospectus itself has been prepared under Luxembourg law, implementing rules laid down by the European Union, for the purpose of qualifying shares for admission on the Euronext Stock Exchange in Amsterdam. The city of London might complain it is losing the business, but it is a sign of the nascent, and long overdue, growth of inter-European capital markets.
About Patrick Drahi
Patrick Drahi was born in Paris to a Jewish family of North African descent. He studied engineering at the prestigious school for the French élites, L’École Polytechnique.
Subsequently, he worked at Philips where he advanced to the position of department head. He began investing privately in the early nineteen nineties – buying small cable companies in the Provence region of southern France.
He founded the company UPC France, then in 1999 sold his shares. In 2006 he bought the company back again through Altice, the cable company he by then owned, for one third of the price.
Altice later purchased cable companies in Luxembourg, Belgium, Portugal and the Dominican Republic. Drahi also owns 40% of Numericable, the largest cable company in France .
In 2009 he purchased interests in Israeli company HOT cable, and also in the MIRS mobile phone company there, which he bought from Motorola.
Patrick Drahi permanently resides in Geneva, and also has an apartment at the Rothschild 1 project in Tel Aviv.
With a personal net worth estimated at around US$1 billion, Drahi traditionally refrains from interviews and exposure to the media.