Macquarie Infrastructure and Real Assets and Korean telecom operator SK Telecom have agreed to buy ADT Caps, the second largest security services provider in South Korea, from US private equity firm The Carlyle Group for an enterprise value of 2.97 trillion won ($2.78 billion; €2.34 billion).
MIRA will pay 574 billion won for its 45 percent stake in the company, while SK Telecom will have the controlling 55 percent stake for 702 billion won, according to a statement from SK Telecom.
The transaction values the business, including debt of 1.7 trillion won, at 2.97 trillion won. “This equals to 11 times the amount of ADT Caps’ EBITDA, SK Telecom said in a statement, describing it as a “reasonable figure” when compared with an average EBITDA multiple of 11.7 for previous M&A transactions of major global peers.
A source familiar with the transaction told Infrastructure Investor that the business is considered infrastructure for its infrastructure-like characteristics, including long-term stable cashflows and essential services to the public.
MIRA and Carlyle declined to comment on the transaction.
ADT Caps mainly engages in physical security services, including access control and facilities management, as well as central monitoring services with video surveillance and dispatch, and guarding services for more than 570,000 commercial and residential customers.
SK Telecom added that the company had a 30 percent share of the local physical security services market, while Carlyle claimed during its four-year ownership, the business grew to become the “most profitable security services player in Korea.” It recorded revenues of 721.7 billion won and operating income of 143.5 billion in 2017, SK Telecom noted.
Carlyle acquired ADT Caps through Carlyle Asia Partners IV and Carlyle Partners VI from US fire protection and security company Tyco in 2014 in a cash transaction valued at around $1.93 billion.
The security business is expected to leverage SK Telecom’s artificial intelligence and Internet of Things technologies for growth in the future. The deal is expected to close in the third quarter this year.
In South Korea, MIRA manages the Macquarie Korea Infrastructure Fund, a 3 trillion won vehicle currently listed on the Korea Stock Exchange. Last month, MIRA closed the region’s largest infrastructure fund – the Macquarie Asia Infrastructure Fund 2 – on its $3.3 billion hard-cap.