Private Equity Firm CVC Plans to List Sunrise


January 19, 2015

The start of 2015 has seen plenty of initial public offering (IPO) announcements and Wednesday added yet another one into the mix. Sunrise, which is owned by the private equity firm CVC Capital Partners, is planning to list on the Swiss stock market.


Switzerland’s Second-Largest Telecoms Operator
Sunrise is currently Switzerland’s second biggest telecoms operator and analysts expect the company could expect a valuation of up to $1.32 billion. The company provides telecoms services for mobile, broadband and landline telephone customers, and according to the New York Times, it has 3.3 million customers. Its biggest competition is Swisscom.


In September, the company announced its revenue stood at 2 billion Swiss francs for the previous 12 months. According to Yahoo Finance, the company is expecting its earnings before interest, tax, depreciation and amortisation (EBITDA) increase by 2 to 3 per cent in 2014.


The Wall Street Journal reported, the deal could value the company up to 5 billion Swiss francs, which is close to $5 billion. The valuation was calculated by comparing the company’s enterprise value (equity plus debt) to its earnings before interest, tax, depreciation and amortisation (EBITDA).


Perfect Time to List
The Swiss telecommunications industry has been going through a major shakeup in recent months. Just last month, the French telecom tycoon, Xavier Niel, bought Orange Switzerland from Apax Partners. The acquisition was worth close to $3 billion and added more competition to the Swiss market.


The Financial Times reported that the private equity firm is set to pay down some of Sunrise’s debt. According to the newspaper, the firm could cut the debt to 2.7 times the company’s EBITDA. The debt currently stands at 4.7 times the EBITDA. Furthermore, the company has announced to pay out 65% of free cash flow in dividends from next year if the listing goes according to plan.


Signs of a Merger?
Many industry experts had been expecting a possible merger with Orange to counter Swisscom’s market lead. Yahoo Finance cited a person close to the deal stating, the IPO might make the merger easier in the long-term, although there aren’t currently any plans for a merger.


The private equity firm CVC, which bought the company in 2010, is expected to hold on to a majority stake in the company, even after listing. The firm, which holds 90% stake of Sunrise, will have its stake diminished during the IPO. Nevertheless, the Wall Street Journal quoted Sunrise’s chief financial officer, André Krause, telling the company will “probably remain the most important stakeholder in any case”.


The Biggest IPO?
If the listing goes ahead as planned, it will be one of the biggest IPOs in Switzerland since Petroplus flotation in 2006. According to Dealogic, the IPO would also be one of Europe’s largest telecom offering in three years.


The deal activity has been picking up in recent months and 2015 has already witnessed a flurry of IPO announcements. The IPO activity in the telecom, media and technology sector tripled last year and it looks like 2015 will be another busy year for the industry.

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