HKBN Ltd has received a non-binding preliminary indication of interest from I Squared Capital, potentially setting up a bidding war for the Hong Kong-listed broadband provider.

The global infrastructure fund has made a separate proposal to acquire all of the outstanding shares in HKBN, according to a regulatory statement on Monday, which confirmed an earlier report from Bloomberg News. If it proceeds, I Squared would do a deal via its portfolio company HGC Global Communications Ltd. HKBN and I Squared are in discussions on the terms of the proposal, including price. Trading in HKBN will resume on Wednesday.

I Squared’s approach could be at HK$5 to HK$6 per HKBN share, or slightly higher than the one by China Mobile last month, people familiar with the matter have said. 

HKBN said on Nov 20 that its board had received a non-binding proposal from China Mobile Hong Kong Co, a unit of the state-backed carrier, about a potential cash takeover bid. China Mobile has conducted due diligence on the potential acquisition and has been negotiating with HKBN’s major shareholders, buyout firms MBK Partners and TPG Inc, people with knowledge of the matter said earlier.

China Mobile has indicated it’s willing to pay at least HK$5 per share for their holdings, which would value HKBN at more than HK$6.5 billion, according to the people.

HKBN shares have climbed 39% this year, giving the company a market value of about HK$6.4 billion.

I Squared owns closely held telecoms provider HGC Global Communications, which it purchased in 2017 for HK$14.5 billion. HGC, founded in 1995 and formerly known as Hutchison Global Communications Ltd, competes with HKBN by offering similar services in Hong Kong.

US-based I Squared had previously tried to buy HKBN but a deal was never reached, partly due to disagreements over valuation, Bloomberg News reported last year. HKBN drew preliminary takeover interest from investment firm IDG Capital earlier this year, Bloomberg News has reported.

HKBN offers internet as well as telecom solutions, data centres and WiFi services. Its major shareholders also include Canada Pension Plan Investment Board and Singapore’s GIC Pte Ltd.

  - Bloomberg