KKR bid heats up auction for Australia Leighton unit

KKR & Co LP has jumped into the auction for the fibre-optics business being sold by Australian contractor Leighton Holdings Ltd, a source familiar with the process told Reuters, eyeing a business that analysts say could fetch as much as A$870 million ($918 million).

KKR's entry into the NextGen sale pits it against rival Providence Equity Partners and Australian telecommunications group TPG Telecom Ltd and underscores buyout firms' strong interest in one of Asia-Pacific's busiest private equity markets.

Several private equity deals have stalled this year in the region's fourth-largest economy, however, dogged by valuation issues as the regional economy and markets sagged, although Leighton's need to pay down debt is expected to bolster the chances of this deal going through.

Leighton, controlled by Spain's ACS SA, is selling the intercity fibre-optic business, known as NextGen, and two smaller data businesses Metronode and Infoplex.

KKR, Providence and Leighton declined to comment. TPG Telecom was not available for an immediate comment. The source declined to be identified as the sale process was confidential.

Australia has seen some of Asia-Pacific's biggest leveraged buyouts in recent years but its private equity-backed M&A volumes fell by more than half to $2.5 billion for the first three quarters of 2012, compared with $5.3 billion in the year earlier period, Thomson Reuters data shows. Australia is Asia's fourth-biggest private equity market by deal volumes, according to the data.

STRONG GROWTH

Deals that got derailed this year include Pacific Equity Partners' A$1.4 billion sale of its share registry business Link Group, TPG Capital Management LP's and Bain Capital's bids for listed surfwear maker Billabong International, and Brambles Ltd's cancelled sale of its $2 billion Recall information management business, which had attracted interest from buyout firms.

But some deals are still in the works. Blackstone Group is in talks to buy Ingham Chickens in a potential $1.5 billion buyout, according to a source with direct knowledge of the situation. Blackstone has declined to comment on the talks and Ingham has declined to disclose details regarding bidders.

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