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Cinven has completed its successful IPO of Ziggo N.V. (‘Ziggo’ or the ‘Company’), the largest cable operator in the Netherlands, on the NYSE Euronext Amsterdam.  Cinven led the original investment in Ziggo in 2006 and retains a 27% shareholding in the business post-IPO.  At close of trading on 26 March 2012, Ziggo ordinary shares were trading at a 21% premium to the issue price.

The Ziggo IPO initially generated total gross proceeds of €804 million, through the sale of 21.7% of the Company at €18.50 per share. The shares were priced at the top end of the range, reflecting the strong demand and giving an initial market capitalisation of €3.7 billion. The first day of dealings was 21 March 2012. In addition, the over-allotment option was fully exercised resulting ultimately in a free float of 25% of the issued share capital of 200 million shares. Total gross proceeds, including proceeds from the exercise of the over-allotment option, were €925 million.

Key deal highlights

  • Cinven identified the opportunity to create Ziggo in 2006 through a combination of three Dutch cable businesses – Kabelcom, Casema and Multikabel – building on its significant investment experience in the European cable sector
  • Kabelcom was acquired in August 2006 for €2.6 billion and Casema in September 2006 for €2.1 billion, alongside Warburg Pincus. These businesses were then merged with Multikabel to form Ziggo which created the leading cable operator in the Netherlands that now represents 56% of the Dutch cable market by homes passed
  • Cinven has considerable expertise of acquiring and integrating European cable assets through the formation of Numericable, a leading French cable operator created through a combination of several cable businesses between March 2005 to July 2006. It subsequently acquired Completel in September 2007 to form Numericable / Completel which continues to perform well
  • Cinven’s Netherlands team was instrumental in acquiring the Ziggo cable assets, particularly given its relationship with Essent, the owner of Kabelcom, thereby identifying Kabelcom as an investment opportunity prior to the sale of Casema
  • Cinven’s investment strategy was to consolidate the cable market in the Netherlands, realising substantial synergies from combining several of the leading operators and then to invest in the combined group to grow the business through higher quality services for customers. Over €1 billion was invested to upgrade the network significantly and provide a best-in-class service.

Ziggo’s network covers 4.2 million homes in the Netherlands and the company has 3 million subscribers to its services.  In the year to 31 December 2011, the Company delivered strong financial performance with revenues increasing by 7.4% to €1.48 billion, mainly driven by subscriber growth and higher average revenue per user (ARPU), and Adjusted EBITDA up 6.6% to €835 million.

David Barker, Partner at Cinven, commented:
“Cinven’s investment in Ziggo demonstrates the benefit of our considerable sector expertise, having already built a highly successful and substantial cable business, Numericable, in France through a series of acquisitions. At the same time, it reinforces the strength of our local European network to originate investment opportunities by identifying prospects before they come to market.” 

“Both the Ziggo and Numericable / Completel transactions underline our ability to execute complex transactions, to take advantage of market consolidation opportunities, and generate value for our investors. Ziggo has been a classic ‘buy and build’ investment.  The Company has successfully grown revenues and margins whilst delivering improved services for customers. We have retained a significant stake in the business as we believe there is further value to be generated in the coming years.”

Bernard Dijkhuizen, CEO of Ziggo, added:
“Without the vision, experience and entrepreneurial approach of Cinven and Warburg Pincus, Ziggo would never have seen the light of day.  As a result of their commitment and support for continued investment in the business, Ziggo has been able to establish itself as a clear market leader with the most attractive product proposition in the Dutch market.  Under their ownership, we have achieved significant growth and, as a result of capital expenditure in excess of €1 billion, we have laid a strong foundation for continued growth and cash flow generation, the benefit of which will now be shared with our new public investors.” 

Key operational highlights

Cinven was able to generate significant growth in Ziggo through:

  • Successfully up-selling and cross-selling additional products to existing and new subscribers to drive triple-play penetration and higher ARPU (Average Revenue per User)
  • Integrating three of the largest cable operators in the Netherlands, generating substantial synergies and sharing operational best practices across the companies. This resulted in a significant improvement in Adjusted EBITDA margins, from 50% in 2006 to 57% in 2011. In total, Adjusted EBITDA increased by 67% since acquisition in absolute terms
  • Delivering significant upgrades to the network by investing over €1bn during Cinven’s ownership, allowing for an enhanced service offering, including high speed internet, high definition television and video on demand services
  • Significantly deleveraging the business, given its highly cash generative nature, and launching two highly successful bond offerings in 2010 totalling nearly €2 billion at favourable rates, with the close co-operation of Cinven’s Financing team. This also had a positive impact on Ziggo’s debt maturities and raised the Company’s profile in the capital markets.

Growth opportunities
Ziggo’s strategy is to drive growth by leveraging its network capacity advantage to offer best-in-class ‘Triple Play’ services including high functionality digital TV, high speed broadband internet up to 120 Mbps and fixed line telephony services.  In addition, the Company is actively pursuing new growth opportunities, including ‘TV Everywhere’ services across TVs, PCs, tablets and smartphones and continuing to expand its offering for business customers.

J.P. Morgan and Morgan Stanley acted as joint global co-ordinators for the IPO; Deutsche Bank, J.P. Morgan, Morgan Stanley and UBS acted as joint bookrunners; ABN Amro, HSBC, Nomura and Rabobank as joint lead managers; ABN Amro and Rabobank acted as joint retail bookrunners; and Societe Generale acted as co-lead manager.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.