Eltel AB (publ) (“Eltel” or the “Company”) today announces its intention to launch an initial public offering (the “IPO”) of its ordinary shares on Nasdaq Stockholm. Eltel is a leading European provider of technical services to companies that own and operate critical infrastructure networks in the areas of Power, Communication and Transport & Defence. Eltel mainly operates throughout the Nordic and Baltic regions and Poland, but also has operations in Germany, the United Kingdom and Africa.
In order to further support Eltel’s strategy and future progression of its business, the Company’s current principal shareholders, 3i and funds managed by 3i and BNP Paribas, and shareholders within management deem that a listing of the Company’s shares is the logical next step for Eltel, enabling access to capital through the Swedish and international capital markets. Furthermore, a stock exchange listing is expected to contribute to increased recognition and brand awareness of Eltel as a technical services company among current and potential customers. For these reasons, the board of directors has applied for listing on Nasdaq Stockholm.
Nasdaq Stockholm has decided to approve the Company’s shares for listing, subject to customary conditions, such as the approval of a prospectus by the Swedish Financial Supervisory Authority (SFSA) as well as satisfaction of the distribution requirements in respect of the Company’s shares, no later than on the first day of trading, which is expected to be during the first quarter of 2015, depending on market conditions.
3i, and funds managed by 3i, and BNP Paribas will continue to hold significant stakes in the Company following the IPO, and will thereby continue to contribute to the Company’s future development.
Axel Hjärne, CEO of Eltel comments:
“The growth drivers of the Infranet market are numerous with a solid and long-term demand for upgraded, smarter and more modern infrastructure. Through more than a decade of hard work we have established a true and specialised service company, with a decentralised corporate culture. We aim to further improve profitability and continue to grow – both in our core markets and through expansion in targeted major European Infranet markets – by utilising our expertise for maintenance and upgrade services and project deliveries for the critical infrastructure of society”.
Gérard Mohr, chairman of Eltel’s Board of Directors comments:
“The management team has done an outstanding job in developing Eltel into an industry-leading Infranet services company. With a solid financial track record and support from favourable long-term industry trends, the potential for continued profitable growth is attractive”.
The Infranet services industry was formed over a decade ago as a result of de-regulation of the power and telecom markets and privatisations across Europe, which prompted operators of infrastructure networks to begin outsourcing the services provided by their in-house technical services organisations. In 2001, Eltel was established as an independent Infranet services company when Fortum Oy decided to outsource its field service organisation.
Eltel is today a leading European provider of technical services to the Infranet industry, comprising companies that own and operate critical infrastructure networks in the areas of Power, Communication and Transport & Defence. Eltel mainly operates throughout the Nordic and Baltic regions and Poland, but also has operations in Germany, the United Kingdom and Africa. Eltel provides a broad and integrated range of services spanning from project planning and execution to installation services and services related to maintenance and operation.
Eltel’s key strengths
- Leading provider of technical services in Europe for infrastructure networks
- Focus on an attractive market offering non-cyclical and long-term structural growth
- Powerful and scalable business services model
- Loyal and growing customer base and diverse contract portfolio
- Platform for value creation through selective M&A-driven growth
- Resilient cash flow generation
Eltel’s strategic priorities for continued profitable growth include expanding organically by maintaining leadership in its core markets, focusing on high-growth segments and strengthening its services platform. Furthermore, the Company will focus on growth through selected M&A and outsourcing, further improvement of operating performance and continuing to build a winning culture.
In 2013, the number of employees was approximately 8,500 and net sales amounted to EUR 1.15 billion. For the first nine months of 2014, the Company’s net sales growth amounted to 11.0 percent compared to the same period in 2013, with an operative EBITA margin of 4.9 percent.
Eltel’s financial highlights
|Nine months ended
|Years ended 31 December|
|Net sales growth %||11.0%||(2.3%)||0.4%||13.6%||18.1%|
|Operative EBITA margin||4.9%||4.6%||4.5%||4.2%||4.6%|
|Operative Cash Flow||42.0||32.2||56.6||30.1||50.2|
|Cash Conversion %||152%||82%||108%||65%||115%|
|Number of personnel (end of period)||8,538||8,641||8,459||8,495||8,064|
About the industry
Driven by ageing networks, rapid technological change and regulatory pressures, European countries have commenced and are expected to continue making substantial investments to build, upgrade and maintain the next generation of infrastructure. According to the European Commission, estimates point to investment needs in the range of between EUR 1.5–2.0 trillion by 2020 across the EU’s energy, communication/IT and transport sectors. Infrastructure networks are at the centre of these significant investment needs. The scope of these investments in the Infranet industry is going beyond modernisation and capacity expansion, further increasing society’s reliance on emerging intelligent infrastructure networks. The new infrastructure aims to be more efficient, cheaper to operate and maintain and environmentally sensitive.
The anticipated future growth of the Infranet technical services market is underpinned by several favourable fundamental trends. These trends include (i) increasing regulatory requirements, (ii) continued increase in the level of outsourcing, (iii) ageing power infrastructures, (iv) increased use of renewable and energy-efficient solutions, (v) technology-driven shifts in consumer demand and (vi) convergence of networks.
About 3i and BNP Paribas
3i Group plc is an international investment manager listed on the London Stock Exchange which is focused on mid-market private equity, infrastructure and debt management with operations in nine countries across Europe, Asia and North America.
BNP Paribas has a presence in 75 countries with more than 180,000 employees, including 140,000 in Europe. It ranks highly in its three core activities: Retail Banking, Investment Solutions and Corporate & Institutional Banking.
The initial public offering of Eltel will comprise newly issued shares to reduce and to facilitate the refinancing of the Company’s indebtedness and a sale of existing shares. The shares will be offered to qualified institutional investors in Sweden and internationally, as well as to the public in Sweden.
BNP Paribas, Morgan Stanley and SEB are acting as Joint Global Coordinators and Joint Bookrunners in the IPO and Pohjola Bank is acting as a Co-Lead Manager.
Further announcements relating to the process will be made in due course.
For more information, please contact
Gunilla Wikman, Investor Relations Manager at Eltel AB
tel: +46 725 843 630
Hannu Tynkkynen, Senior Vice President, Group Communications at Eltel AB
tel: +358 40 3114503
This announcement is not and does not form a part of any offer for sale of securities.
Copies of this announcement are not being made and may not be distributed or sent into the United States, Australia, Canada, Japan or any other jurisdiction in which such distribution would be unlawful or would require registration or other measures.
The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and accordingly may not be offered or sold in the United States absent registration or an exemption from the registration requirements of the Securities Act and in accordance with applicable U.S. state securities laws. The Company does not intend to register any part of the offering in the United States or to conduct a public offering of securities in the United States.
Any offering of the securities referred to in this announcement will be made by means of a prospectus. This announcement is not a prospectus for the purposes of Directive 2003/71/EC (together with any applicable implementing measures in any Member State, the “Prospectus Directive”). Investors should not subscribe for any securities referred to in this announcement except on the basis of information contained in the aforementioned prospectus.
In any EEA Member State other than Sweden that has implemented the Prospectus Directive, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive, i.e., only to investors who can receive the offer without an approved prospectus in such EEA Member State.
This communication is only being distributed to and is only directed at persons in the United Kingdom that are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (ii) high net worth entities, and other persons to whom this announcement may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Persons distributing this communication must satisfy themselves that it is lawful to do so.
Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may,” “continue,” “should” and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Eltel believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors, which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements.
The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice.
 Operating result before acquisitions related amortisations and non-recurring items.
 Operative cash flow is calculated as the sum of (a) operating result before acquisition related amortization (EBITA), (b) depreciation and (c) change in net working capital less (d) net purchase of property, plant and equipment (capex).
 Operative cash flow as a percentage of EBITA.