Numericable: Floating down the Seine When private equity is getting out, it is always worth asking why other investors want to get in. In the case of Numericable, there may be good answers. The French cable operator, covering 10m households, filed initial public offering documents this week, with a view to floating 20 per cent to 40 per cent of its equity. Private equity backers Cinven and Carlyle - which own the group alongside management vehicle Altice - look likely to sell down, although there will also be a capital increase of €200m-€250m. This is not the first European cable company to start parting with private backers. Cinven itself, for example, offloaded a stake in Dutch cable operator Ziggo in four recent tranches, finally exiting last spring. The timing - seller-wise - has looked good. Cable stocks have been hot thanks to the focus on convergence - the idea that consumers can be sold packages of internet, telephony and pay-TV services and will become more loyal as a result. This has spurred M&A activity, with Liberty Global bulking up its European portfolio through deals for Virgin Media and Telenet, and Vodafone bidding for Kabel Deutschland. The MSCI European sector index has risen 50 per cent since late 2010. True, deal activity may undergo a temporary lull as purchases are digested but Numericable is already in the M&A frame: if Vivendi spins off its telecoms business, a follow-up merger with the cable group could offer synergies, and Vivendi's control of pay-TV group Canal+ would no longer to be an obstacle. Meanwhile, Numericable's underlying business case is far from unattractive. Sales - €1.3bn last year - are projected to grow 2-5 per cent annually between 2013 and 2016, and margins to widen from 47 per cent to 50 per cent (at the ebitda level). The downside is that sector multiples remain lofty - typically, 9-11 times at the enterprise value to earnings level. Bargain-hunters can probably tune out.