Warburg invests in telecoms

Global private equity firms Advent International and Providence Equity Partners have realised their investment in Mach, the Danish telecoms billing company, with the circa €600m sale of the business to Warburg Pincus. The exit is understood to have netted the original investors around six times their initial commitment.

The two firms invested €95m in November 2002, with Advent acquiring 64% of Mach and Providence taking the balance. Advent pursued a top-down approach to this niche sub-sector of the mobile market. It had targeted competitors Dan Net and EDI before buying Mach in conjunction with US specialist Providence.

Mach focuses on clearing and billing services within roaming. Since the acquisition, Advent has sought to broaden the service offering and has expanded into new areas such as WLAN as well as business intelligence, revenue assurance and fraud detection.

The company recently acquired Dan Net in a deal valued at €160m. Advent has looked to broaden the combined service offering and has expanded into new areas since the acquisition.

In keeping with the general trend in mobile telephony, operators have largely out-sourced functions provided by the likes of Mach and EDI. It is a market that demands a huge amount of data processing and insiders say it is best served by a relatively small field.

With Mach and EDI now controlling most of the market, it will be interesting to see how Warburg Pincus plans to turn a profit on a company that has already been well worked by two of private equity’s top telecom specialists.

Warburg Pincus’s telecom practice has invested about US$2.2bn of equity across a wide range of companies.