Asia Netcom buyer sees IPO in 12-18 months -source

SHANGHAI, May 22 (Reuters) A British group buying Asia Netcom from China Netcom Group Corp. plans to take the company public within 12 to 18 months of closing the deal, a source close to the transaction told Reuters.

The group, which includes General Enterprise Management Services Ltd. (GEMS), Spinnaker Capital and Ashmore Investment Management, has finalised the deal, which still needs approval from the Chinese government, said the source, speaking on condition of anonymity.

The group will pay about 4 million for Asia Netcom, a new incarnation of the former Asia Global Crossing which was insolvent when Netcom bought it for 0 million and assumed unspecified debt in 2003.

The deal will ultimately value Asia Netcom at about 32 times forecast EBITDA for 2006, making it one of the highest valuations in its field, the source said.

China Netcom, the smaller of China's two fixed-line phone companies, said last week it might sell Asia Netcom, but did not provide more details.

Simon Murray, a former Hong Kong telecoms executive who now heads GEMS, said the Asia Netcom purchase would create a powerful player in Asian telecoms, when combined with other telecoms assets in the region held by the group of buyers.

If the company is turned around, Murray told Reuters in a previous interview, the new operation would be in an ideal position to eventually go public.

The other main possibility would be for the new owners to make Asia Netcom profitable, then sell it to the highest bidder.

Reuters DKS DB2248