NEW YORK (The Deal) -- Since 2007, Zayo Group and its private equity backers have rolled up close to 30 fiber networking companies, many of them orphans from the telecom bust of 2002.
The Englewood, Colo., outfit, run by chairman and CEO Dan Caruso, has also accumulated an impressive group of PE backers, including GTCR, Battery Ventures, Centennial Ventures, Charlesbank Capital Partners, Columbia Capital, M/C Venture Partners, Morgan Stanley Alternative Investment Partners and Oak Investment Partners.
With recent gains by the stocks of peers such as Level 3 Communications (LVLT) and TW Telecom (TWTC), bankers and analysts have suggested that 2014 would be an auspicious time for Zayo to go public and perhaps raise funds to launch European deals.
"The multiples in the fiber space have certainly moved up nicely," said Donna Jaegers of D.A. Davidson.
"They are looking at that," she said of the valuations. "Plus, if you are a PE backer that's always the easiest way to get liquidity."
Fiber deals have been valued at 9 to 11 times Ebitda, and Jaegers suggested that Zayo would look toward the higher end of that range. She said she expects the company to file an S-1 in early spring.
Cowen and Co. valued TW Telecom at 9.8 times projected 2014 Ebitda, and Level 3 at 8.3 times Ebitda, in January. Zayo would arguably trade above those numbers.
About a third of the company's sales come from dark fiber, or strands of fiber that are not lit by optical communications equipment. Large corporate or telecom clients provide the equipment to light the fiber themselves.