Abu Dhabi Investment Authority is discussing joining KKR & Co. on its €23 billion ($25 billion) bid for Telecom Italia SpA’s landline network, people with knowledge of the matter said.
(Bloomberg) — Abu Dhabi Investment Authority is discussing joining KKR & Co. on its €23 billion ($25 billion) bid for Telecom Italia SpA’s landline network, people with knowledge of the matter said.
ADIA is in advanced talks to provide equity support for the private equity firm’s bid, according to the people, who asked not to be identified discussing confidential information. ADIA may invest directly in the network or take a stake in the KKR fund that will house the company, they said.
Deliberations are ongoing and no final decisions on if, or how, ADIA will participate have been take, the people said. Representatives for ADIA, KKR and Telecom Italia declined to comment.
US-based KKR is in exclusive talks with Telecom Italia, which is selling its landline network to slash its debt pile, after trumping a rival proposal from Italian state lender Cassa Depositi e Prestiti SpA and Macquarie Asset Management. Telecom Italia said last month that it also preferred KKR’s bid because of assurances on execution and timing.
KKR has been seeking partners for its bid for the Telecom Italia business. Bloomberg News reported in June that Italian infrastructure fund F2i SGR SpA intends to invest about €2 billion including debt in return for a roughly 10% stake in the network unit.
ADIA’s discussions about backing the network deal comes as the Middle East’s sovereign wealth funds, which control more than $3 trillion, boost spending across regions and asset classes. ADIA has shown strong appetite for infrastructure assets, chasing investments in everything from railcars to ports in recent years. ADIA previously joined KKR in investing in Telecom Italia’s fiber carrier.
Telecom Italia, a former monopoly, faces a complex mix of high labor costs and ever-higher investments to modernize its network infrastructure. Grid separation has been debated in Italian industry and politics for more than a decade, with details and deal outlines shifting constantly.
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