Private equity firms team up to bid for Vivendi’s Brazilian unit GVT

A group of private equity firms, including KKR & Co LP (NYSE:KKR) and Apax Partners LLP, intends to make a joint bid of as much as USD5bn (EUR3.7bn) for Brazilian telecommunications company Global Village Telecom (Holding) SA, or GVT, a unit of French Vivendi SA (EPA:VIV), Bloomberg said today citing knowledgeable sources.

Other participants in the group are Gavea Investimentos Ltda, owned by JP Morgan Chase & Co (NYSE:JPM), and Cambuhy Investimentos Ltda. Brazilian investment bank BTG Pactual Group is still mulling over the possibility of taking part in the bid, the sources said. Valor Economico had reported previously, without citing sources, that BTG Pactual had pulled out of the race.

Their rival in the competition is US satellite-television provider DirecTV (NASDAQ:DTV), which is expected to propose a price closer to the asking price of USD8bn, due to the synergies that a possible deal could create. According to one of the sources, potential bidders are getting ready for the second round of the auction, which is seen to be completed by the end of next month.

Representatives for Vivendi, Apax, KKR, BTG Pactual and JP Morgan refused to comment. DirecTV did not immediately respond to Bloomberg’s message asking for a comment, whereas Cambuhy Investimentos did not answer the agency’s calls.

Vivendi put GVT up for sale in 2012 after buying it for EUR3bn (USD4.1bn) in 2009.

Private equity firms in talks to acquire RBS’ Direct Line

Royal Bank of Scotland Group Plc (LON:RBS) may not get to list its unit Direct Line Insurance Plc as two consortia made up of leading private equity groups prepare to make a move on the business, the Sunday Times reported citing City sources.

RBS has been instructed by European Union regulators to sell Direct Line as compensation for its state-sponsored rescue in 2008. The UK lender is planning to float 30% of the business in September and has lined up 11 investment banks to assist with the process, with Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS) and UBS AG (NYSE:UBS) assigned leading roles in the undertaking.

RBS is expected to file the required documents with the London Stock Exchange next month, the newspaper added.

However, the two private equity consortia are preparing to make their move at the end of July, potentially thwarting RBS’ plans. One of the groups comprises US private equity giants Blackstone Group LP (NYSE:BX) and Bain Capital LLC, while the rival bidding combo is made up of KKR & Co LP (NYSE:KKR) and UK-based Apax Partners Holdings Ltd and BC Partners Limited, the Sunday Times was told.

Direct Line, the company behind brands such as Churchill and Green Flag, is the number one UK car insurer in terms of policy numbers and the top home insurance provider, the article went on to add.

It has long been coveted by rival sector players and private equity groups although RBS’ attempt to offload the business in 2008 proved unsuccessful as bidders failed to match the asking price of GBP7bn (USD10.9bn/EUR8.9bn).

BC Partners also featured among the bidders then, joining forces with Apollo Global Management LLC (NYSE:APO). The auction also attracted US billionaire investor Warren Buffett and a consortium made up of CVC Capital Partners Limited and insurance group Swiss Re (PINK:SSREY).

Direct Line’s valuation has shrunk significantly since then although the company reversed its heavy 2010 losses to exit last year with profits of GBP454m, the Sunday Times said.

Former Everything Everywhere CEO teams with Apax, KKR in bid for firm — report

Tom Alexander, the ex-CEO of Everything Everywhere Ltd, has enlisted the financial backing of private equity majors KKR & Co LP (NYSE:KKR) and Apax Partners Holdings Ltd for a daring GBP8bn (USD12.6bn/EUR9.9bn) move on the top UK mobile phone operator, the Sunday Times reported citing sources with knowledge of the matter.

Everything Everywhere emerged on the scene in 2010, bringing together in a joint venture T-Mobile and Orange, the UK units of Deutsche Telekom AG (ETR:DTE) and France Telecom SA (EPA:FTE). The mobile operator, which has 27m users, was led by Alexander until last year, when he resigned to have more time for his family.

After spending months in an attempt to line up financial backers for a potential takeover bid, Alexander has enlisted the help of KKR and Apax, which are reportedly willing to provide about GBP3bn, the Sunday Times said. However, bankers believe that the consortium may find it impossible to secure the rest of the money before the autumn given the current state of the debt market.

Should Alexander manage to pull off the deal, he would be responsible for one of the largest UK takeovers backed by private equity. The record belongs to the 2007 buy-out of Alliance Boots, which featured a GBP11bn price tag and also had KKR in the driving seat.

But besides potential funding difficulties, Alexander and his partners have an even greater obstacle to overcome, namely persuading Deutsche Telekom and France Telecom to sell Everything Everywhere at this point.

While the telecommunications giants do not plan on being long-term investors, sector valuations are too low at present to tempt them into an exit, especially since neither company is hard-pressed for cash, a leading banker was cited as saying by the newspaper.

According to sources in the City, Deutsche Telekom and France Telecom estimate their joint venture to be worth at least GBP10bn, the Sunday Times added.