Former bosses of Virgin Media are trying their hands at building a new business in the European Telecommunications, Media and Technology sector. They hope to raise up to £30 million and float the group, called Zegona Communications, on AIM on 19 March.
It's interesting to see Zegona be explicit with its strategy from day one – and that's to have a 'buy-fix-sell' approach. This is not going to be a new tech business; instead it looks more like an activist investor where it will give management a kick up the rear, possibly install new leadership and find ways to make more money. The intention float announcement says it wants to target 'strategically sound businesses that require active change to realise full value'.
The £30 million fundraise target is somewhat misleading. That's enough to just get the business started. When it comes to making acquisitions, you can expect a nought or two on the end of that figure. It wants to create a portfolio of assets with enterprise values in the range of £1 billion to £3 billion at acquisition. That means it will have to raise significant amounts of capital using debt and/or equity.
The board features Eamonn O'Hare as chairman and chief executive; he was chief financial officer at Virgin Media from 2009 until 2013. Prior to that O'Hare was UK chief financial officer at Tesco (TSCO). Robert Samuelson is going to be chief operating officer. Before joining Zegona, he was executive director of group strategy at Virgin Media from 2011 to 2014, and previously developed Virgin's telecommunications and media businesses.
It will issue up to 25 million shares at 120p. Cenkos and JP Morgan are the brokers for the float.