• Proceeds used alongside EUR 1.736bn management equity and EUR 1.63bn ICG investment
• Circet’s modest LTV and large equity cushion attract lenders
• Slowing growth expectations a concern

 

Circet’s loan-to-value ratio is modest with an enticing equity cushion for lenders, though its future earnings growth trajectory may slow, according to eight buysiders.

The French telecommunications infrastructure services provider is marketing a EUR 3bn debt financing split across a euro-dollar TLB and B1/B+ rated EUR 500m seven-year senior secured bond.  The EUR TLB is up to a EUR 2.1bn maximum size with margin talk at E+ 325bps-350bps and 99.5 OID, with a USD TLB of minimum USD 500m size marketed with margin talk at SOFR+ 325bps-350bps and 99 OID.

Circet will use EUR 3bn of senior secured debt proceeds alongside EUR 1.736bn of equity from Circet management and EUR 1.63bn of new money from ICG, as well as EUR 413m of rolled leases and other debt, towards paying a EUR 6.457bn enterprise value, EUR 69m transaction costs, EUR 177m overfunding and EUR 76m of additional overfunding for M&A to be closed, according to its investor presentation.

Circet management will hold a 51% stake in the group with ICG holding 49%, according to the company investor presentation.

The company is marketing its notes offering with 4.6x pro forma net leverage based on a LTM 2Q26 pro forma adjusted EBITDA after KGPCo Products of EUR 697.5m. There are significant EBITDA adjustments with LTM 2Q26 accounting EBITDA at EUR 576.5m, LTM 2Q26 adjusted EBITDA at EUR 602m, LTM 2Q26 pro forma adjusted EBITDA at EUR 635.4m and LTM 2Q26 pro forma adjusted EBITDA after 2026 acquisitions of EUR 680.6m.

The company’s total capitalisation multiple is estimated at 9.5x given EUR 3.366bn of equity, leaving a sizeable equity cushion for debt holders given 4.6x pro forma net leverage according to the investor presentation.

One source familiar noted ratings agencies are affirming existing B1/B+ ratings with stable outlook, and no downgrades. Additionally, ICG is injecting more than EUR 1.6bn of new cash equity, while management is rolling over more than EUR 1.7bn, with the LTV close to 50% (on EV/EBITDA of 9.5x).

“This is not capital intensive, so the free cashflow works with a significant equity cushion. But the equity cushion involves existing investors reinvesting so how reliable is it? The energy opportunity is there and there is some geographic diversification but there could be challengers in terms of competition and the company need to diversify away from the mature telecom end-market,” one buysider said. “There are EBITDA adjustments and the biggest customer is Openreach. The cost-base is highly variable and wages and salaries are a big part of the cost base and could rise.”

A second buysider noted the low LTV and equity cushion is a positive and EBITDA adjustments are there but the deal is not one they will play due to the secondary volatility, adding it’s not a good market to issue in.

A third buysider added the bondholders security is not so good with a US subsidiary [KGPCo Products] 49% owned at FY25 [with the stake reducing to 34% as of 23 September 2026].

Additionally, marketed net leverage excludes EUR 250m of new shareholder PIK bonds issued by Circet Omnium to ICG as part of the equity injection, which are being contributed or on-lent to the issuer in connection with the transaction. The new shareholder PIK bonds have capitalised interest of 12.5% per annum, mature 7.5 years after the acquisition completion date and are deeply subordinated to the notes and senior facilities, the bond prospectus notes.

“Circet is a well-established name among leveraged loan investors, supported by a resilient credit profile, solid operating KPIs and a proven track record of growth driven by a disciplined acquisition strategy over the years,” a fourth buysider said. “A rare quality among companies that grow acquiring other businesses but the special sector characteristics where the Circet operates allowed the deployment of this management’s vision.”

The fourth buysider added the current transaction offers an attractive opportunity to invest in EUR 500m of 2033 senior secured notes (SSNs) with standard docs, alongside a loan financing, to facilitate the PE fund-to-fund transfer operation. That buysider stated the dual-tranche approach helps to broaden and diversify the investor base across the loan and bond markets, while they expect the two instruments to price at broadly similar yields, subject to their respective terms and structural features.

“The transaction is almost a refinancing, which facilitates execution and supports a high level of participation from existing investors looking to roll over their exposure,” the fourth buysider said. “The leverage goes slightly up due to the overfunding but it remains contained.”

Circet la vie

The company earnings have grown for the LTM 2Q26 period versus previous years. The company adjusted EBITDA was EUR 532m in FY23, falling to EUR 515.6m in FY24 then rising to EUR 534.4m in FY25 before reaching EUR 602m for the LTM 2Q26 period according to the bond prospectus.

“Circet is Europe’s largest telecom infrastructure service provider with an expanding US presence, while it operates an asset-light turnkey network services model. It handles end-to-end lifecycles across FTTH, mobile infrastructure, and energy transition projects,” a fifth buysider said. “Crucially, Circet owns no physical tower or fibre assets—designing, building, activating, and maintaining them for telco operators. Capex remains minimal.”

The fifth buysider stated that private equity ownership under Advent in 2018, followed by ICG, and now the continuation buyout between ICG and management, has utilized leverage aggressively, multiplying revenue and EBITDA significantly over the past nine years. That buysider added that operational friction and contract renegotiations in newer territories (notably Germany and the US) triggered significant one-off restructuring charges in 2024 to 2025, alongside ongoing customer concentration with tier-one operators.

Circet is highly free cashflow generative. The company in the LTM 2Q26 period generated a EUR 602m adjusted EBITDA and faced EUR 46m capex, EUR 96.5m reimbursement of lease liabilities, a EUR 48m working capital outflow, EUR 139.6m in cash interest and other financial expenses, EUR 60.1m taxes, and EUR 22.8m non-recurring items and management adjustments, meaning EUR 189m of free cashflow, the bond prospectus notes.

A sixth buysider stated the only saving grace is that it generates some cash, adding the comparables have seen some multiple deflation, and it is quite levered. That buysider noted it could suffer post-peak fibre rollout in the future in their view.

“There are EBITDA adjustments and we work off the accounting EBITDA. Is this more levered? It’s a telecoms company and even E+ 350bps on the loans looks tight,” the third buysider said. “Growth has come through acquisitions and there has been a fibre overbuild and this can stop or tail-off. If the main part of the business is fibre then it suffers.”

The first buysider noted they are not so enthusiastic, adding the key problem is the main end-market is telecoms and the growth in the past was M&A driven as well as organic with the fibre rolled-out in several markets. That buysider added the peak fibre roll-out is now done for markets like Spain and France and it is now more about managing fibre networks, noting they struggle to see growth recovery ahead but some markets still have to roll out fibre like Germany and the USA, and they don’t know if growth still continues.

A seventh buysider added they are not playing and passed on the credit a while back, adding there is not much left in terms of fibre rollouts.

Look to the fibre now

The company was formed in 2006 in Paris, and entered the US market in 2022, completing around 45 acquisitions since 2010, including 27 since 2021. The company has leading market shares in the mature European telecom markets of around 15%-20% across several core European geographies including France, the Netherlands, Belgium, Italy, Spain and Ireland. The company only holds around 2% of the EUR 41bn US telecom infrastructure market and around 4% of the EUR 11bn German market, and these two markets are a key priority for accelerated expansion. The company overall addressable market is sizeable (see chart below).

Source: preliminary bond prospectus

The company is a global digital infrastructure and energy services company serving owners of critical infrastructure. The company offers digital infrastructure services in both wireless and wireline telecommunications and data centre services, as well as energy infrastructure services. The company telecom platform include capabilities from engineering to network rollout, installation and maintenance across all underlying telecom technologies. These include optical fiber, copper and cable loop, mobile wireless networks and other technologies.

One risk is that in the LTM 2Q26 period, its top five customers accounted for 38% of pro forma revenues and its largest customer was 10% of pro forma revenue, according to the bond prospectus.

The source familiar said France’s share of revenue had declined from 54% in 2020 to 21% today, while the contribution from the company’s two largest customers had fallen from 33% to 18% over the same period. Both of its largest customers in 2020 were French telecoms operators, whereas neither is today.

“Despite the recent volatility affecting French credits, Circet’s international footprint and significant revenue contribution from outside France should help insulate the business from France-specific risks,” the fourth buysider said. “Its geographic diversification provides a degree of protection against the current market concerns surrounding French issuers.”

 

Let the yield begin

The bond price relative value can be assessed versus high yield comparables such as France-based multi-technical services company Spie and Sweden-based provider of construction installation services Assemblin Caverion, the first buysider noted. Spie has BB+/BBB- rated EUR 500m 4.875% senior unsecured 2032s indicated at 99.875-mid with a 4.9% yield on IHS Markit. Assemblin Caverion has B1/B+ rated EUR 500m 6.25% senior secured 2030s indicated at 102-mid with a 5.6% yield on IHS Markit. Assemblin Caverion Group had grown earnings strongly in recent years, although its new issue proceeds were to fund a sizeable dividend to sponsor Triton Partners.

“If the TLB prices at E+ 325bps then the bond should price above 6%. You can compare versus Spie but Spie is higher quality, more diversified and listed. Assemblin Caverion can also be considered a peer,” the first buysider said. “The business looks okay but there is execution risk and there can be cost inflation with it not easy to past-through cost increases as higher prices.”

An eighth buysider stated they like the maintenance servicing business and it is diversified with a long track record, noting it is diversified and the LTV and free cashflow look okay, but they expect tight pricing and their fair value would be high 6s.

“The primary credit risk remains relentless M&A and structural event risk. Circet has completed over so many acquisitions under private equity ownership, showing zero intention to tap the brakes—especially as it prefunds deals and targets hyperscale data centre connectivity,” the fifth buysider said. “S&P pegs adjusted debt/EBITDA at 5.7x in 2026, explicitly noting that rating headroom is currently zero. While S&P models an improvement toward 5.2x by year-end 2027 on fading one-offs and margin recovery, that deleveraging looks overly optimistic given their ongoing acquisition appetite. Fair value for B+ seven-year paper sits around 5.5% to 6.0%. I’d want a decent new issue premium to stomach the event risk.”

Investor meetings finish today (13 October). Loan commitments are due today at 5pm UKT for the EUR tranche and 5pm NYT for the USD tranche.

BNP Paribas (B&D) and Deutsche Bank are joint global co-ordinators and physical bookrunners on the bond.

For the loans, JPMorgan is left-lead on the USD loan, with BNP Paribas, Bank of America, Deutsche Bank and JPMorgan joint global co-ordinators on the euro loan.

ICG and JPMorgan declined to comment. BNP Paribas, Bank of America, Deutsche Bank and Circet did not respond to requests for comment.