Apollo, Warburg Pincus, and RRJ Capital Compete for €5bn Vodafone Spain Deal

A consortium led by RRJ Capital, the private equity firm run by former Goldman Sachs Group Inc. banker Richard Ong, is considering an offer for Vodafone Group Plc’s Spanish business, people with knowledge of the matter said.

Vodafone has been working with an adviser as it evaluates options for the Spanish business, Bloomberg News reported in July. Warburg Pincus is among those considering a bid for the assets, while Apollo Global Management Inc. has also shown initial interest, people familiar with the matter said previously.

A potential bid by the RRJ group could value the Vodafone unit at about €5bn ($5.3bn), according to the people, who asked not to be identified as the information is private. The consortium has lined up financing for a potential deal, the people said.

A bid for Vodafone’s Spain business could pitch RRJ into competition with Zegona Communications Plc, an acquisition vehicle, which last month said it was in talks about a deal to acquire the assets from the UK carrier.

Vodafone rose as much as 3% on Friday following the Bloomberg News report, before erasing gains. The stock was down 0.7% at 11:41 a.m. in London, giving the company a market value of £20.6bn.

Deliberations are ongoing and the RRJ-led group could still decide against proceeding with a deal, they said. Representatives for RRJ and Vodafone declined to comment.

A deal would mark RRJ’s second with the British carrier in little more than two years. The private equity firm invested €500m in the Frankfurt initial public offering of Vantage Towers AG, Vodafone’s European mobile-phone towers unit in 2021. RRJ still has an almost 3% stake in Vantage Towers after Vodafone sold a stake in the unit to KKR & Co. and Global Infrastructure Partners under a co-control partnership.

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RRJ and its affiliates manage about $10bn of long-term capital focusing on industries including health care, financial institutions, technology and logistics, according to its website. Before starting at RRJ, Ong was the founder of Hopu Fund and also spent 15 years at Goldman Sachs. Charles Ong, RRJ’s co-chairman and Richard’s brother, was previously chief investment officer and chief strategy officer at Singapore state-owned investor Temasek Holdings Pte.

Spain’s teleco market, already one of Europe’s most competitive, is expected to undergo a deep transformation in the coming months. Orange SA and Masmovil Ibercom SA are awaiting regulatory clearance to merge in a deal that will create Spain’s largest carrier, ahead of Telefonica SA.

The European Commission is tipped to impose strict conditions for the merger, which could potentially lead to Orange and Masmovil having to sell certain assets to a smaller rival. The decision will be taken as a sign of the Commission’s willingness to allow consolidation in the sector.

Newbury, England-based Vodafone has been trying to do a deal in Spain for more than a year. Its previous chief executive officer Nick Read said the market needed consolidation, but ended up on the sidelines as its rivals agreed to merge. Following years of eroding earnings, Read’s replacement Margherita Della Valle demoted the unit to Vodafone’s so-called “cluster” of smaller European businesses and placed it under strategic review.

Source: BNN Bloomberg

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