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EQT, Tillman lining up rival bids for stake in TDF

EQT and Tillman Infrastructure are vying to buy Brookfield’s 45% stake in French towers firm TDF – a business worth about 7 billion euros ($6.8 billion) excluding debt, three sources familiar with the matter told Reuters.

The two investment firms are carrying out due diligence on the company and are expected to submit rival bids in November to replace Brookfield as TDF’s single largest investor, the sources said, speaking on condition of anonymity.

Stockholm-listed EQT and New York-based Tillman are the only bidders in the process, while TDF’s former owner Orange is not interested in re-investing in the French firm through its towers unit Totem, the sources said.

Brookfield, EQT and Orange declined to comment, while TDF and Tillman were not immediately available.

The French towers firm, which also provides radio and television transmission services to French households, has an equity value of about 7 billion euros, the sources said, adding raising the financing to get a deal over the line may prove challenging as debt capital markets have dried up.

The sale comes amid a wave of telecom towers deals in Europe which have seen financial investors aggressively competing for a slice of the region’s largest infrastructure networks.

EQT is trying to deploy cash from its Active Core Infrastructure fund, which was launched in March to buy companies offering “stable cash yield generation, inflation protection and low volatility”.

Tillman Global Holdings, which controls Tillman Infrastructure, clinched a partnership deal with U.S. buyout fund Carlyle in August which committed up to $1 billion to support the company’s expansion in the telecoms towers industry.

Brookfield has been a prolific investor in the European telecoms industry and recently won a deal to buy a 51% stake in Deutsche Telekom’s towers company alongside DigitalBridge.

Deutsche Telekom priced its stake sale in GD Towers at an earnings multiple of about 27 times. But TDF may struggle to achieve a similar valuation as its portfolio includes broadcasting towers which are seen as less attractive by investors, with viewers increasingly relying on internet TV to stream video content.

Back in 2014, Brookfield led an investment consortium that took control of TDF for 1.78 billion euros.

Fellow Canadian investment firm PSP Investments along with APG Asset Management NV and Arcus Infrastructure Partners control a combined 45% stake in TDF, while Credit Agricole Assurances owns the remaining 10%.

Earlier this year, Brookfield hired banks to start an auction process for its TDF stake and informed other investors of its desire to cash out.

PSP is working with Lazard to review its options, while APG has decided it would continue investing in TDF as it sees scope to reap more profit from the company, Reuters previously reported.

TDF reported half-year core earnings of 234 million euros in June, up 8.3% from the same period last year.

Its net debt rose sharply over the past 12 months and hit 2.4 billion euros in June from 1.7 billion euros last year. Reuters

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