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3i backs Eltel Networks

3i, Europe’s leading mid-market private equity and venture capital company, and funds managed by 3i have agreed to invest in Eltel Networks, a leading Nordic electricity and telecommunications network services outsourcing business, from Industri Kapital, TeliaSonera and management.

The deal marks the second 3i investment in the Nordic region in the last month.

Eltel designs, builds, maintains and enhances networks for the telecommunications and electricity sectors. The business, based in Espoo, Finland, operates across the Nordic region and Poland, serving clients such as TeliaSonera, Telenor, Vattenfall and Fortum. It generated €756m in sales last year and is managed along two business segments, field services and large projects.  

“We’re investing in a quality service business which has the opportunity for significant further expansion and which operates in a market with solid, long-term fundamentals,” said Hannu Isohaaro, Country Manager of 3i Finland.

“We are very familiar with this sector. Eltel is in an excellent position to gain market share in its home markets, and there is substantial scope to grow the business further as the open outsourced market in Central and Eastern Europe expands,” Isohaaro added.

3i is backing an ambitious and experienced management team led by CEO Tuomo Rönkkö. “3i impressed us with its knowledge of the industry and its unparalleled international network. With the support of 3i, we will continue to develop the business at home and in Central Europe, where the market is increasingly opening to independent service providers,” said Rönkkö.

Eltel has experienced rapid organic, acquisitive and outsourcing-led growth in recent years. Industri Kapital acquired a majority stake in the company at the end of 2004, and operations were merged with Swedia Networks. It is currently the second largest operator in the Nordic markets.

The deal is subject to the approval of the anti-trust authorities.

Advisers in the transaction include UBS, Pricewaterhouse Coopers, Borenius & Kemppinen, Marsh and EVLI.

Notes to editors

3i is a world leader in private equity and venture capital.  We focus on buyouts, growth capital and venture capital and invest across Europe, in the United States and Asia. Our competitive advantage comes from our international network and the strength and breadth of our relationships in business.  These underpin the value that we deliver to our portfolio and to our shareholders.

The 3i European Buyout Business is a leader in the European mid-market.  We lead mid-market buyouts up to €1bn using insight from our local knowledge, international connections, and our sector teams.  Managing €3bn invested in over 60 companies across Europe, the business invests in all sectors, with a particular focus on media, healthcare and business support services. 3i recently raised a €5bn fund, the largest fund in Europe dedicated to mid-market buyouts. ‘Eurofund V’ will be invested in buyout transactions over the next four years, primarily in Europe. Earlier this spring, 3i took UK support services business Enterprise private.

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