Satellite Firm Avanti Fuelled By £80m Deal

One of the world's biggest investment firms is delivering rocket fuel to a plan by a London-listed satellite company to provide internet coverage to hundreds of millions of people across Africa.

Sky News has learnt that Mast Capital Management, a Boston-based fund backed by the financial giant KKR, is to invest in a $125m (£80m) bond issue which is expected to be launched by Avanti Communications this week.

A stock exchange announcement confirming the debt-raising could come as soon as Tuesday, City sources said.

It was unclear on Monday whether KKR would separately commit new funds alongside Mast, which is privately held and is also said to count the Microsoft co-founder Paul Allen among its investors.

The bond issue, the need for which was signalled by Avanti several months ago, will complete the fundraising required to launch Hylas-4 and will provide a huge boost to the London-listed group.

Mast is already a significant holder of Avanti's shares, and industry insiders said its participation in the bond issue would represent a vote of confidence in the new satellite, which is expected to launch in 2017.

On Monday, Avanti's larger rival, Inmarsat, said it would launch its delayed third Global Xpress satellite later this month.

Demand for privately funded satellite launches is exploding as telecoms and media companies compete to provide cheap internet services and products to consumers and businesses in fast-growing markets.

Africa, which Hylas-4 will complete Avanti's coverage of, is relatively under-penetrated in terms of internet providers, making it a lucrative target for satellite companies.

Companies such as Google and Facebook have drawn up ambitious plans to participate in this area of the space race, while Sir Richard Branson, Coca-Cola, Qualcomm and other corporate giants recently invested $500m in OneWeb, another emerging satellite industry player.

Avanti, which sells satellite data services to telecoms companies, launched its first satellite, Hylas-1, five years ago.

The company is chaired by Paul Walsh, the former boss of drinks producer Diageo and current chairman of Compass, the contract caterer.

Speaking as the Hylas-4 launch plan was unveiled, David Williams, Avanti's chief executive, said: “Now that we are successfully selling services to the biggest telecommunications and media companies in our region, we have improving visibility over how we will continue to activate the underlying market demand on a large scale.

"This satellite is designed based on the requirements those customers have given us.”‎

In an illustration of that demand, Avanti last month announced that it had won a contract from South Africa's business chamber to supply high-speed internet broadband to 1000 small and medium-sized businesses.

An Avanti spokesman declined to comment on the imminent announcement of the bond issue.

The company's share price, which was hit by the explosion of an unrelated SpaceX rocket earlier this year, closed slightly down on Monday at 209p.