The Qatari royal family’s $256 billion (€225 billion) investment fund is being lined up to acquire a major stake in Eir, as some of the phone group’s main hedge fund shareholders seek an exit.
With a flotation of Eir, formerly known as Eircom, not expected for at least two years, the company's second-largest shareholder, York Capital in the US, is selling up to the Qatar Investment Authority (QIA).
It is understood that New York hedge fund Anchorage, which owns almost 38 per cent of the company formerly known as Eircom, will remain the largest shareholder following the transaction.
QIA, the tiny oil-rich state’s sovereign wealth fund, is on course to acquire York’s stake of about 15 per cent in Eir, in addition to a number of smaller shareholdings in the telco owned by other funds.
York and Eir declined to comment last night, while QIA could not be contacted by telephone or email as it was outside of office hours in Doha.
Eir incurred €4.1 billion of gross debt through five ownership changes before filing the country's biggest ever examinership, or bankruptcy protection petition, in 2012. This resulted in its most senior lenders, led by Blackstone, seizing control of the company as €1.8 billion of debt was written off.
The entry of a sovereign wealth fund, which typically has a long-term investment horizon, would allow some lenders-turned-shareholders to cash in their investment after the cancellation in 2014 of a third initial public offering in a decade and a half closed off access to a liquid market.
It would also give Eir breathing space to continue to rebuild its revenues before reattempting a flotation of the group. Chief executive officer Richard Moat signalled last month this may not take place for at least two years.
Euro crisis
The Irish company has had sovereign wealth investors before, when it was bought in 2010 by Singapore Technologies Telemedia (STT), which is ultimately owned by the city-state's investment arm Temasek.
STT exited its investment in 2012 after Eir’s senior lenders rejected its restructuring plan at the height of the euro crisis that would have ranked an investment by the company above other creditors in the event Ireland dropped out of the single currency.
QIA has been one of the main sovereign wealth funds circling European telecoms in recent years. The Doha-based fund and Singapore's GIC had been in talks last year to fund the owner of Three, Hutchison Whampoa's abortive attempt to buy 02 in the UK from Spain's Telefonica. Qatar had also explored taking a stake in Telefonica itself in 2014.
QIA has substantial telecoms experience all the way up to the top of the organisation. Its chief executive is Sheikh Abdullah bin Mohamed bin Saud Al-Thani, a member of the royal family and the chairman of Ooredoo, a Qatari telecommunications group that has previously done business with Denis O’Brien’s Digicel.
Five of the six members of the investment authority’s board appear to be linked to the Qatari royal family, including the chairman, Sheikh Ahmed bin Jassim bin Mohamed Al-Thani.
QIA was originally set up in 2005 to manage the Qatar state’s oil and gas assets. It has continued to diversify in recent months even as oil remained low.
News of Eir’s shareholder overhaul comes days after the group sold a €500 million bond which carries an annual interest rate of 4.5 per cent.
Most of the proceeds will be used to redeem a €350 million bond issued in 2013, which carries a 9.25 per cent annual coupon.
Eir will use the additional money raised to repay €159 million of its remaining €2 billion of debt.
