3i buys Finnish telecom shareholding

A private equity and venture capital provider has bought a 13% stake in a Finnish telecoms company. 3i paid €140 million (£94.7 million) for the shareholding in Finnet, which will now trade as DNA.

3i’s initially bought 25% of the company but this dropped following a merger between five Finnish operators, including DNA. The deal gives DNA’s fixed-line business control of the access network to some 25% of Finnish households.

DNA’s chief executive, Jan-Erik Frostdahl, said: “Having a united group of owners provides a clear opportunity for DNA to continue its development and enables it to achieve its business targets as well as prepare for the capital markets.”

The shares were bought from 18 local telecom operators in the Finnet Group with 3i planning to support DNA’s transition into a national, full-service telecom business offering mobile, fixed line, broadband and cable TV services.

“As a leading private equity investor, we can help companies solve complex ownership situations like this one,” 3i investment director Berndt Schalin said. “We are looking forward to actively supporting DNA in its transition to a fully commercial, integrated telecom operator and in its desire to prepare for the capital markets.”

3i was supported throughout the deal by Citigroup and turned to its existing legal adviser, Borenius & Kemppinen, for support in the transaction. The firm’s team, which included telecom law specialists, was led by the head of its transaction group, Jari Vikiö.

“The challenge concerning the transaction of Finnet was that there were several sellers and other counterparties with all of whom the negotiations were taking place at the same time,” Vikiö said.

The financial and tax due diligence was managed by Tomas Granvik, a partner at KPMG, while inCode’s Strategy and Technology team handled the commercial review.

“KPMG was introduced to the deal at an early phase, but access to the dataroom was not granted prior to the final bid round,” Granvik said. “Due to this, the team faced tight time limits in delivering the report.”

inCode, led by director of Strategy and Technology Joonas Merenheimo, provided 3i with a fact-based assessment of DNA’s business operations and a detailed analysis of the Finnish telecom market.

The firm, part of digital infrastructure provider VeriSign, was approached to manage the review due it its experience of working with businesses in the European telecom industry.

Merenheimo said the due diligence process required telecom expertise and local market knowledge of Nordic countries. “DNA is a complex company, not a pure play mobile, but with links to broadband, fixed telephony, and broadcasting market. We analysed DNA’s business from brand image to network rollout aspects. inCode’s unique industry expertise enables us to analyse the [telecom] market holistically.

“DNA is enjoying a strong growth phase and with the solid management team, we believe DNA is an attractive investment for 3i going forward,” Merenheimo added. “As a leading industry adviser, inCode is committed to helping our customers to assess the value of opportunities like DNA.”

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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