When private equity firm KKR sold almost all its stake in Kingston Communications on June 21, it bypassed Kingston’s brokers Dresdner KW and JP Morgan Cazenove and gave the business to UBS. Bankers said there was some competitive element to the deal, although it was not an auction, and UBS took the stock on to its own books.
The deal kicked off after the close on June 21 and wrapped up quickly that evening. The sale was ambitious: the 114.3m shares represented a 22.2% stake in Kingston and around 135 days’ trading. It was priced at 65p a share, for total proceeds of £75m.
The size of the sale meant that it was viewed as a liquidity event, which was the main attraction for investors, together with the hefty 8.8% discount to the Tuesday close. Bankers said the shares were sold mainly to UK accounts, with a good showing of new names. The stock is not widely researched and UBS itself does not cover the company. Kingston traded down to the offer price on Wednesday.
Kingston Communications, a local telecoms company based in the UK city of Hull, was privatised through a flotation in 1999. Hull City Council still owns 30.61%. KKR received its 23.68% stake at the end of 2004, when it sold data networking company Omnetica to Kingston. Following last week’s sale, KKR retains 7.6m shares, a 1.48% stake.
KKR has been active in the buyout market since the mid-1970s. The firm has invested in excess of US$21bn of equity capital in more than 120 transactions. The total financing raised by KKR for management buyouts and other investments exceeds US$136bn.