LONDON – Third-generation wireless technologies – and the massive capital outlays they demand – have spent the past few years draining financial and human resources from the European debt and loan markets. Rather than completely preoccupying fixed income professionals, however, a number of continental private equity funds are sprouting up to handle the volume.
Most notable in late November was GMT Communications Partners, which closed a E365 million vehicle dedicated to trans-European media and technology plays. The news follows up on London’s Argus Capital Group decision to extend its $172 million reach to Central and Eastern Europe.
Not only will GMT’s fund invest in complementary wireless technologies – including an investment in a voice recognition technology optimized for PDAs and mobile phones expected to be announced within the next few weeks – but it also will focus its attention on competitive local exchange carriers (CLECs), traditional media and Internet infrastructure.
Jeff Montgomery and Tim Green manage the new venture vehicle alongside Tehranian. The trio first came together in 1992 as founders and managers of Baring Communications Equity Ltd.
While the 18-strong investment team is based in London, the management trio’s track record indicates that nearly 80% of the new firm’s investments will fall outside the U.K., extending from France and Spain to Poland, Romania and Slovenia. With an investment window of five years, the new fund is expected to take a similar path, investing an average of E10 million to E25 million in each deal.
Although the vehicle’s sector focus is well-defined, its stage focus is not. GMT is willing to take on buyout deals with cash flow positive companies, pump development capital into earlier-stage companies and even fund start-ups with defensible market share.
The fund, originally targeted at E250 million, held a first close last month, followed by a second close this past summer. Limited partners include a number of financial institutions and a slew of entrepreneurs and individuals active in the media and telecom sectors.
While 40% of the LPs are European players, half are neighbors from across the pond.
“Over the last 18 months, U.S fund managers have caught on to European telecom and media – it’s exciting and unexploited,” Tehranian said. “There’s lots more money being raised in Europe than in the U.S.,”
A handful of Asian and Middle Eastern investors are also partners in the fund.