Shareholder offering a stake in Flow

CVBI Holdings (Barbados) and Clearwater Holdings (Barbados), which are owned by Risley, and which owns a controlling interest in Columbus, will issue new shares — representing a minority position in the parent companies — to investors through an agreement it signed with Portland Holdings last week.

The offer provides an opportunity for investors to participate in the “wealth creation of private companies”, outside of investing in bond issues, according to Robert Almeida, Portland’s senior vice-president and portfolio manager.

“Some of the best companies are not public,” he said.

Columbus has taken on new shareholders since it started over six years ago.

Most recently, the company boasted that billionaire, cable TV pioneer and telecommunications veteran Dr. John Malone has bought a more-than-20 per cent share in the company, albeit, his net worth was estimated by Forbes at US$5.6 billion, placing him among the top 200 billionaires in the world last September.

The private placement now opens up equity participation to a broader base, even though it still is meant to attract financial institutions and high net worth individuals.

The requirement for investors — finanical instutions and individuals — vary from country to county, but the private placement is of a sort that requires a minimum investment of US$100,000 to US$150,000 depending on the jurisdication, according to Almeida.

Portland, which is owned by Micheal Lee Chin, who also owns a piece of Columbus, has already started promoting the offer to accredited investors in Canada.

Another vehicle through Cayman will allow non-Canadians to participate.

Columbus has recorded fairly strong financial performance over the last four years.

Its revenue grew from US$214 million in 2008 to US$427 million in 2012, while its earnings before interest, tax, depreciation and amortization (EBITDA) climbed from US$101 million to US$195 million over the four-year period.

The company, which operates in 25 countries in Caribbean, Latin America and North America has two operating segments — wholesale broadband capacity services (Columbus Networks) and retail broadband-enabled services (Flow).

Its retail offerings, which include digital cable television, broadband Internet, digital landline telephony, represent the larger piece of the business which has grown faster than its wholesale services.

Retail services increased its share of revenue from 56.1 per cent in 2008 to 59.2 per cent in 2012, and that is with operations in only four of the countries within which it operates — Trinidad, Jamaica, Grenada, and Curacao. It recently launched its fifth Flow in Barbados, where it plans to build out over the next three years.

“Columbus seeks to accelerate its growth through the acquisitions of select cable providers and broadband service providers in the Caribbean and Latin American region,” said a brochure posted on Portland’s website. “Each of the 25 touch points of the wholesale network presents an opportunity for acquiring or developing a retail business.”

On the wholesale side of its business, Columbus’s true potential lies in its under utilised capacity — only nine per cent of its network is currently being used.

IP traffic in Latin American is expected to grow at a compound annual growth rate (CAGR) of 49 per cent between 2011 and 2016, according to a forecast done by Cisco Visual Networking Index (VNI)

The growth is expected to be driven by increasing Internet penetration and growing usage of broadband intensive applications, like Facebook and Youtube.

“Columbus Networks’ strategy is to continue to extend its subsea business to reach new countries in the region while continuously investing in in-country back-haul to extend its network from the shoreline into major city centres, thereby sourcing new high margin revenue streams and creating significant barriers to entry,” said the investor brochure.

Columbus Networks owns and operates the America’s Region Caribbean Optical Ring System (ARCOS) subsea and terrestrial broadband fibre optic network that spans more than 23,000 kilometres and connects the Caribbean, Latin America and North America.



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