TELECOM TRANSFORMED

As a provider of software products to telecommunications operators, UK-based Cramer has witnessed at first hand the fluctuating fortunes of that industry over the decade since the firm was launched in 1996. And, as one of its main shareholders, London-based Kennet Venture Partners has seen similarly turbulent times afflicting the European venture arena.

Having come through adversity together, Cramer and Kennet have seen their powers of endurance handsomely rewarded. Last month, Kennet exited its investment in Cramer through the $375 million (€295 million) sale of the business to Amdocs, a larger US-based rival. The deal delivered Kennet an 11 times multiple on the $5 million it invested in the firm through two financings, the first of which took place in September 1999 from Kennet's 1997-vintage £48 million debut fund.

To be fair, Cramer, whose customers include the likes of Bell Canada and KPN, never looked entirely like a crash victim, even in the darkest days of the tech downturn. Kennet managing director David Carratt, who sat on Cramer's board, says the company has always managed to turn an annual profit.

Nonetheless, some choppy waters have had to be negotiated. Says Carratt: “The biggest challenge came in mid-2000 when the company was geared for high growth and hired new people. But then the telecom operators cut back their spending on new services and Cramer had to reduce its cost base to what the operators could afford. It was the first time the company had laid off staff.”

Also in 2000, the firm received an offer from a Nasdaq-listed company at what Carratt describes as an “exciting” price. However, the offer was 100 percent stock, and was pulled when Nasdaq crashed.

Following these setbacks, Cramer then had to negotiate the transition to a new chief executive in 2001 when co-founder Jon Craton stepped aside to be replaced by Guy Dubois, an industry veteran. Assessing this and other challenges, Carratt says that survival was a challenge.

But, as the recent sale evidences, Cramer not only survived but went on to flourish. For venture firms with young telecoms businesses still in their portfolios, the end result will be greeted as an encouraging development.

TERRA FIRMA SELLS WASTE BUSINESS FOR £1.4BN
Terra Firma Capital Partners, the private equity group headed by Guy Hands, has sold the waste disposal unit of Waste Recycling Group to Fomento de Construcciones y Contratas (FCC), a Spanish construction and service group, for £1.4 billion (€2.03 billion). The transaction follows the demerger in May of Waste Recycling Group into waste disposal and renewable energy businesses. The sale does not include the renewable energy business, which is the largest renewable power generation company in the UK. Terra Firma could make a profit of around £1 billion from the sale of Waste Recycling Group said media reports, with analysts valuing the renewable energy business at around £650 million.

MID EUROPA NETS $275M ON KARNEVAL SALE
Mid Europa Partners, a Central and Eastern Europe buyout firm, has sold Karneval Media, a Czech ([A-z]+)-based cable business, to UPC Europe, a subsidiary of US cable operator Liberty Global, for €322.5 million ($415 million). The purchase price represents a 9.8 times multiple on its estimate of Karneval's operating cash flow for 2007. Baring Communications Equity Emerging Europe, a $74.25 million vintage 1997 fund, also exited its investment in Karneval in the deal.

LION CAPITAL CHIPS IN FOR KETTLE FOODS
Lion Capital, a UK private equity firm focused on the consumer sector, has acquired Kettle Foods, a US maker of crisps and snacks, in a deal that values the business at between $280 million to $320 million (€218 to €248 million). Citigroup provided debt for the transaction. Lion Capital is investing from its debut fund, Lion Capital Fund I, which closed on €820 million last June. Kelly Mayer, a director at Lion Capital, said that the fund is now 80 percent invested.

LBO FRANCE BAGS VINCI'S CARGO BUSINESS
LBO France has bought Worldwide Flight Services, the global airport ground and cargo handling business of Vinci, a construction group, in a deal valuing the business at €315 million ($405 million). The transaction is expected to close in October 2006. LBO France was advised by Mayer, Brown, Rowe & Maw. Vinci was advised by the Paris office of White & Case.

TRAVELODGE SOLD TO DUBAI FOR £675M
Permira has sold Travelodge, a ([A-z]+)-based budget hotel chain, to Dubai International Capital, the investment arm of Dubai Holdings, for £675 million ( 992 million). Permira acquired Travelodge alongside roadside restaurant business Little Chef in December 2002 for £712 million. Little Chef was sold to the People's Restaurant Group for £52 million last October. The original investment was made from Permira Europe II, which raised €3.5 billion in 2000. Travelodge is the UK's second largest budget hotel group, operating 291 hotels, of which 279 are in the UK with nine in Ireland and three in Spain.

CINVEN BUYS AVIO FROM CARLYLE
The Carlyle Group has sold its 70 percent stake in Avio, an Italian manufacturer of aircraft and naval engines, to Cinven for €2.57 billion ($3.3 billion). Finmeccanica, an Italian aerospace, defence and security group, also sold its 30 percent stake in Avio and reinvested alongside Cinven. Carlyle and Finmeccanica acquired Avio from Fiat Group, an Italian automobile manufacturer, in September 2003 for €1.6 billion, including €500 million of debt provided by Banca Intesa, Citigroup, Goldman Sachs, Lehman Brothers and Mediobanca.

AUCTUS MAKES 18X ON TIME PARTNER SALE
Auctus Management, a German midmarket private equity firm, has sold its majority stake in Time Partner, a temporary employment agency, to Investcorp, a Bahrain-based alternative asset manager, in a €250 million ($320 million) transaction. Nicolas Himmelmann, partner at Auctus Management, said that the sale generated proceeds of more than €100 million and an 18 times money multiple.

BAIN, APAX SQUEEZE INTO €8.3BN PHILIPS DEAL
Bain Capital and Apax Partners have joined the private equity consortium comprising Kohlberg Kravis Roberts, Silver Lake Partner and AlpInvest Partners, which originally beat them in the auction for an 80.1 percent stake in the semiconductor division of Royal Philips Electronics for €8.3 billion ($10.6 billion). The buyout battle also saw off competition from a third consortium of Blackstone, Permira and Texas Pacific. The deal is structured with a €3.4 billion purchase price, the assumption of €4 billion in debt and a value of €0.9 billion for Philips' remaining stake in the business.

STIRLING SQUARE ENTERS ITALY
Stirling Square Capital Partners, a pan-European private equity firm, has made its first investment in Italy with the management buy-in of Metroweb, a fibre optics network, in a €230 million ($295 million) deal. Stirling Square acquired a majority stake in Metroweb from AEM, a listed energy utility group based in Milan. AEM will retain a 23.5 percent stake in the business following completion of the deal. ING Bank provided debt financing for the transaction. Stirling Square was advised by Pavia & Ansaldo and Clifford Chance.

WARBURG, CINVEN IN €2.6BN ESSENT BUY
Warburg Pincus and Cinven have beaten off competition from Liberty Global, a US broadband cable operator, to buy Essent Kabelcom, a Dutch cable company for €2.6 billion and create the Netherlands's largest operator in the sector. The two buyout firms plan to merge Essent Kabelcom with Casema and Multikabel, two Dutch cable television rivals already owned by Warburg and Cinven. Together, they will serve over 3.3 million customers and have revenue of approximately €870 million for the financial year ended 31 December 2005.

EUROPEAN CAPITAL OFF THE MARK IN UK
The UK office of European Capital, part of Nasdaq-listed American Capital, has done its first deals. It has invested €123 million ($156 million) in the buyout of Avery Weigh- Tronix, providing equity, senior debt and senior subordinated debt, as well as a revolving credit facility. The firm holds approximately 80 percent of the business with management owning the balance. European Capital also invested €126 million in the buyout of Farrow & Ball, a luxury decorative paints and wallpaper business, providing equity, senior loans, senior subordinated debt and loan notes. European Capital invested alongside management to hold a 72 percent stake in the business.

BRIDGEPOINT MAKES 5.5X FROM ALL3MEDIA
Bridgepoint has sold All3Media, a UK television production company, to Permira, Europe's largest buyout firm, in a deal valuing the business at £320 million (€467 million). Bridgepoint generated a 5.5 times money multiple on its original 2003 purchase, when the firm acquired the TV division of listed media and music group Chrysalis in a £45 million management buy-in. Bridgepoint has also returned £100 million to shareholders following a £288 million refinancing of Pets at Home, a UK specialist pet product retailer.