KKR private equity investor increases stake in Telefónica’s Telxius to 40%

Private equity investor KKR has increased its stake in Telefónica’s Telxius infrastructure subsidiary to 40%.

Telefónica told Spanish markets regulator CNMV that KKR – formerly Kohlberg Kravis Roberts – has exercised its call option as agreed under the original deal in February 2017.

Telxius Telecom is the arm of Telefónica that owns subsea cables and mobile transmission masts. Telefónica originally hoped to float shares in Telxius in an initial public offering (IPO), but

had to drop those plans because of market conditions.

In February KKR said it would spend €1.275 billion on a 40% stake, but in several stages by the end of 2017. KRR did the deal through its Taurus Bidco subsidiary.

This week’s transaction, of 38 million shares in Telxius for €484.5 million, will be completed in December, said the statement to CNMV.

That represents 15.2% of the shares in Telxius, and KKR also bought 24.8% of the company in October, under the February deal, giving KKR a total of 40%. The deal values Telxius at $3.19 billion, almost what its valuation would have been if the IPO had worked.

In February Jesus Olmos, KKR’s head of Spain and the investor’s global co-head of infrastructure, said: “The combination of Telefónica’s industrial expertise and KKR’s financial and operational support will help Telxius as it continues to scale and grow. We are confident that the exploding demand for mobile data, driven by the rise in 4K and virtual reality content, together with the need for reliable internet infrastructure will help drive strong growth in the business.”

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