Mobilcom stake falls cheap to TPG

Texas Pacific Group, a recent investor in TIM Hellas, is picking up France Telecom’s 27% stake in mobilcom, the German mobile phone company, for just €265m. The result is the final chapter in a disastrous story for France Telecom, which assumed €7bn in debt to acquire the stake at the height of the European telecoms boom in 2000. It has since written down the investment to zero.

Texas Pacific Group is taking an 18.2% share in mobilcom, with TPG-Axon Capital investing for a 9.1% holding. TPG-Axon is the firm’s hedge fund affiliate. Shares in the German telecom rose by 12.3% to €17.17 on news of TPG’s entry.

TPG said in a statement that it endorsed the swift completion of mobilcom’s contemplated merger with “We believe that the commercial and operational synergies between both companies are significant, and will benefit all shareholders in the combined business,” the firm said.

TPG was one of the first US-based private equity firms to move into Europe. It has a number of successful European investments under its belt, including satellite company Eutelsat and UK-based department store operator Debenhams. Both of those companies have recently been recapitalised and are now considered IPO candidates. Private equity shareholders in Debenhams have already extracted £1bn in equity from the company, which was acquired for £1.9bn.

TPG’s other European investments include Grohe, Isola, Ducati and Spirit Group. It also holds a fair number of investments in the technology and telecoms sectors. In addition to TIM Hellas, Eutelsat and Isola, TPG is a shareholder in Findexa, MEMC Electronic Materials, Seagate Technology, ON Semiconductor and Crystal Decisions/Business Objects.

The firm recently raised TPG Partners IV, a US$5.8bn private equity fund. It has around US$20bn under management globally.