Target Information

Linzor Capital Partners ("Linzor") has entered into an agreement to acquire 100% of Wi-Net Telecom S.A.C. ("WIN"), a prominent telecommunications provider in residential fixed services within Peru. Operating under the "WIN" brand, the company offers high-speed broadband internet through fiber optic technology, serving approximately 527,000 clients via a proprietary Fiber-to-the-Home (FTTH) network that covers roughly 3 million homes. This acquisition is subject to standard closing conditions as stipulated in the stock purchase agreement.

This acquisition signifies Linzor's second foray into the telecommunications sector, further building on its prior investment in Mundo, another significant telecom provider in Chile, which was sold to the international fund Digital Bridge in 2021. Under Linzor's stewardship, Mundo successfully expanded its fiber network threefold and greatly enhanced its brand recognition, securing its status as a leading residential internet provider in Chile.

Industry Overview in Peru

The telecommunications industry in Peru is characterized by a low broadband penetration rate, presenting considerable opportunities for expansion and growth. Currently, this sector is rapidly evolving, with increasing demand for high-speed internet services driven by the surge in digital content consumption and remote work trends. The introduction of advanced technologies such as fiber optics has enabled service providers to meet the growing needs of a tech-savvy consumer base.

Additionally, the Peruvian government has prioritized the expansion of telecommunications infrastructure to ensure wider internet access across the nation, particularly in underserved areas. This initiative reflects a commitment to bridging the digital divide and enhancing connectivity for ordinary citizens and businesses alike.

Moreover, foreign investments have been on the rise, with several international players keen on capitalizing on the market's growth potential. This has led to increased competition among telecom providers, encouraging innovation and service improvements, which ultimately benefits consumers.

In this favorable market environment, WIN is poised to leverage its existing infrastructure and customer base to capitalize on the growing demand for broadband services, positioning itself as a frontrunner in Peru's evolving telecommunications landscape.

Rationale Behind the Deal

The acquisition of WIN aligns with Linzor's investment strategy focused on capital deployment in underserved sectors. Given Peru's low broadband penetration rates, WIN presents significant growth opportunities that can lead to enhanced service accessibility and substantial financial returns for Linzor. The investment also underscores Linzor's commitment to fostering positive developmental impacts through its portfolio companies.

Furthermore, WIN's established service network and clientele provide a solid foundation for growth, making it an attractive platform for Linzor to expand its operations in the fixed residential services market across Peru.

Information About the Investor

Founded in 2006, Linzor Capital Partners is a prominent private equity firm operating across multiple Latin American countries, including Mexico, Chile, Colombia, Peru, and Uruguay. The firm has successfully raised over US$1.4 billion in capital commitments and holds a diverse investment portfolio spanning various sectors, such as financial services, education, healthcare, retail, and technology. Linzor focuses on companies with robust growth potential, employing strategic initiatives and operational enhancements to foster sustainable business growth.

Through its latest fund, Linzor IV, and collaboration with local and international co-investors, Linzor is well-equipped to finance this acquisition. Additionally, a consortium of five of Peru’s largest banks will facilitate acquisition financing.

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The acquisition of WIN by Linzor Capital Partners is viewed positively, given the substantial growth potential in Peru's telecommunications sector. With a low broadband penetration rate, WIN provides a unique opportunity for expansion and the potential for significant returns on investment. Moreover, Linzor's previous experience with Mundo demonstrates its capability to enhance telecom operations and profitability through strategic improvements.

Furthermore, the broad support from local banks and investors indicates confidence in WIN's business model and growth prospects. With the country's ongoing emphasis on improving internet access, WIN is likely to benefit from a favorable regulatory environment and increased market demand.

Nonetheless, the potential challenges associated with increasing competition and market saturation should not be overlooked. Linzor will need to leverage its industry expertise to navigate the competitive landscape effectively and safeguard WIN’s market position.

In conclusion, this acquisition is poised to be a strategic and beneficial investment, provided Linzor continues to implement operational best practices and innovation at WIN, ensuring it meets the evolving needs of the Peruvian market.

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