Delta Partners’ PE investment fund counts four deals

Delta Partners’ private equity fund has closed a further two investments since late last year, doubling the number of investments in its portfolio to four. The fund was initially established in March 2007.

Puelinckx is happy for the fund to take its time in selecting the best investment opportunities

At the beginning of February Delta Partners announced the successful closing of the ADC (Armenian Datacom Company) transaction, representing the telecom fund’s fourth acquisition. Delta Partners agreed to invest US$6 million as an equity injection and acquire 39 per cent of ADC, with the aim to develop the company’s service portfolio and support geographical expansion.

ADC is a Norwegian-Armenian joint-venture established in 2006 by Yerevan Telecom and Norwegian investors. ADC offers data communications and broadband services over its own 400 kilometres of fibre network in Yerevan (the capital of Armenia) to the corporate segment. ADC plans to expand its broadband services to the residential segment by Q209 as well as expand its geographic footprint to several other Armenian urban centres.

The proceeds of Delta Partners’ investment in ADC will be primarily used to expand into Internet provisioning for the residential segment in large Armenian cities, and also to fund the expansion of the fibre backbone to the border with Georgia.

Late last year, Delta Partners announced the fund’s third investment, in partnership with ADIC MENA Partners. At the end of December 2008 the two companies formalised participation in the investment group that acquired OrasInvest from Orascom Telecom Holding, in a leveraged buyout worth US$180 million.

Delta Partners worked with ADIC MENA Partners in negotiating the OrasInvest deal, announced in November. ADIC MENA Partners, the lead partner in the investment group, is a private equity fund advised by ADIC PE Management, a subsidiary of the Abu Dhabi Investment Company.

OrasInvest is a telecommunications support company focussing on mobile telecoms tower construction and other corporate services such as inventory management, packaging, delivery and collection. It is headquartered in Cairo and has operations in six other countries outside of Egypt – Algeria, Tunisia, Pakistan, Bangladesh, UAE, and Saudi Arabia. OrasInvest is expected to end 2008 with revenues in excess of US$ 175 million.

Speaking to Comm. last August, Delta Partners’ managing partner Kristoff Puelinckx, said the company’s telecom fund was established with a target annual rate of return of 25 per cent, focussing on taking minority or majority stakes worth anywhere between US$3 million and US$15 million per investment. The total size of the fund is US$100 million.

At the end of 2007 Delta Partners’ announced its first investment, which was in Karoui & Karoui, an integrated pan-Maghrebian advertising and media company specialising in providing services to telecoms operators as well as to clients in other industries.

Last May Delta Partners announced it had entered into the Russian telecoms market in collaboration with Richard Branson’s Virgin Group to establish a new broadband access provider, known as Virgin Connect. Delta Partners invested in Trivon Group, a Swiss-based telecoms holding company providing Internet access services in the main Russian regions, jointly with Virgin Group and Eurasia Capital Management. Virgin Connect provides broadband Internet connectivity, voice and value added services to both residential and corporate markets.

“By the end of this year we would have invested 60-80 per cent of the capital (in the telecoms investment fund),” Puelinckx commented last August. “We have an investment period of three years, so there’s still time to build up deals.”