Industry buys WilTel Assets

While the secondary market is anticipating a number of large deals to close this year, corporate sellers continue to put private equity assets up for sale.

One recent deal that transpired was a sale of private equity holdings by WilTel Communications to Industry Ventures, PE Week has learned.

WilTel, a Tulsa, Okla.-based broadband services provider backed by Contrarian Capital Management, invested $5 million in Battery Ventures’ Convergence Fund and $3 million in Centennial Ventures’ Centennial Strategic Partners Fund VI in 1999.

Industry Ventures paid $1.25 million for the company’s stakes in the two funds. But WilTel had already received returns from both, with Battery’s fund performing well.

The assets were offered to as many as five different secondary buyers, including Thomas Weisel Partners and Cogent Partners, according to a source familiar with the transaction. Industry Ventures offered the best bid and the deal was completed late last year

About three years ago, WilTel had considered selling many of its private equity assets on the secondary markets. The company didn’t feel it was going to get a good enough price for the assets and pulled the sale. Since that time, according to a company source, WilTel got about five times more value over the last three years than the secondary market buyers wanted to pay, a sign that market pricing on the secondary market today is more competitive and friendlier to buyers.