TIDMDGI9
RNS Number : 2122Q
Digital 9 Infrastructure PLC
27 June 2022
27 June 2022
DIGITAL 9 INFRASTRUCTURE PLC
("DGI9", the "Company" or, together with its subsidiaries, the
"Group" )
Digital 9 Infrastructure agrees to acquire stake in Arqiva, a UK
data, network and communications service provider
Digital 9 Infrastructure plc (ticker: DGI9), a leading investor
in the infrastructure of the internet, is pleased to announce that
it has agreed the terms of an acquisition of a 48.02%(1) voting
stake (the " Acquisition ") in Arqiva Group Limited (" Arqiva
").
The Completion of the Acquisition is subject to customary
regulatory approvals. The Acquisition will be funded through a
combination of GBP300.0 million in cash and a vendor loan
note.(2)
The stake is being acquired from Canada Pension Plan Investment
Board (" CPP Investments (TM)"). CPP Investments first acquired a
stake in Arqiva in 2009. The remaining shares in Arqiva are held by
its existing shareholders.
Arqiva is a UK-based data, network and communications service
provider, the sole operator of digital terrestrial television and
radio infrastructure in the United Kingdom and an Internet of
Things ("IoT") connectivity platform for utilities, including a
smart water metering platform working at scale in the UK. Amongst
others, it owns the following national UK infrastructure:
-- c.1,450 broadcast transmission sites: ensuring Public Service Broadcasters can meet their government-mandated coverage obligations to deliver impartial and trusted content to UK viewers.
-- Satellite ground infrastructure: delivering 1,100 TV channels
internationally to five continents, via 80 ground stations
accessing over 30 third-party owned satellites.
-- National IoT utilities connectivity platform: enabling smart
metering and more efficient network monitoring and management for
utility companies. Over 12 million premises connect to Arqiva's
smart meter networks with 50 million data points delivered
daily.
Financial Highlights
The Acquisition has been funded through a combination of
GBP300.0 million in cash (the " DGI9 Equity ") and a GBP159.3
million non-recourse vendor loan note.(2) The DGI9 Equity component
will be funded through the Group's existing cash resources
including its Revolving Credit Facility. The valuation for the
Acquisition has been based on the financial results of Arqiva as at
30 June 2021, being the latest audited accounts. At that date, the
business reported a total EBITDA of GBP332.4 million and GBP1,878.3
million of net external debt.(3)
Investment Rationale
Arqiva provides the Company with a unique opportunity to benefit
from:
-- Further portfolio diversification across the digital
infrastructure asset classes in which the Company invests.
-- Significant and highly visible Sterling-denominated cash flow
generation, part of which is regulated by Ofcom.
-- A weighted average contract length of c.8 years(4) with
inflation protection against 69% of the revenues Arqiva
generates.
-- Long-established customer relationships, and a high quality,
blue-chip customer base including the BBC, ITV, Discovery, BT
Sport, and Sky.
-- Attractive and growing national IoT platform providing
connectivity for utilities, connecting over 15 million business and
consumer premises.
The investment in Arqiva continues to support the Company's
investment purpose which aligns to United Nations Sustainable
Development Goal #9, specifically:
-- Enabling connectivity to those unable to access or afford
modern internet access; Arqiva is the only means by which just
under 8 million adults access TV. Included in this group are some
of the most vulnerable in society; 3 million of these people live
alone, 4 million belong to the C2DE socio-economic group, and
nearly 1.8 million have a disability.(5)
-- Ensuring a more efficient use of natural resources through
the Arqiva IoT and connectivity platform. Arqiva's IoT connectivity
private network infrastructure enables business and customers to
manage energy and water resources with less wastage.
Portfolio Composition
Following the investment in Arqiva, the Company has built a
c.43% pro forma exposure to wireless networks, complementing its
c.39% exposure to data centres and c.18% to subsea fibreoptic
networks.
Phil Jordan, Chair of Digital 9 Infrastructure plc,
commented:
"We believe the safe and reliable access to data and content
across multiple devices and the closer connectivity between
broadcasters, utilities and their customers will contribute to the
UK's sustainable economic development. Arqiva is a long-standing
trusted communications infrastructure operator in the UK and
complements our investment mandate to build resilient
infrastructure, promote inclusive and sustainable
industrialisation, and foster innovation. Arqiva expands the
Company's exposure to wireless networks and will support the
Company's total return and yield targets as we continue to build a
high-quality portfolio of scalable platforms and technologies."
Thor Johnsen, Head of Digital Infrastructure at Triple Point
Investment Management LLP, commented:
"The core, contracted nature of Arqiva's national broadcasting
service is complemented by its high growth and innovative smart
metering and connectivity solutions. The business benefits from the
utility sector's need to manage data more effectively across
networks, whilst it continues to maintain long-term cash flow from
its national broadcasting service."
1 The interests being acquired include a shareholder loan which
will result in DGI9 acquiring a 51.76% economic interest at current
valuation levels, and 48.02% equity, in Arqiva.
2 VLN estimated funding of GBP159.3m as at June 30, 2022. The
VLN amount is subject to certain adjustments at closing, including
any potential dividend distributions. The acquisition will take
several months to close and is subject to various regulatory
approvals and notifications.
3 Source: Arqiva Group Limited Annual Report 2021 ; includes
fair value of swaps.
4 From core contracts that represent 73% of forecasted revenues
in FY22.
5 Hind, G., Harrington, T. and Standen-Jewell, T., 2022. BBC and
subscription. Impractical and not inclusive. Enders | Analysis,
p.2.; C2DE as defined in the NRS social grades classification.
S.
CONTACT DETAILS
Triple Point Investment Management LLP (Investment
Manager)
Thor Johnsen
Arnaud Jaguin
Andre Karihaloo +44 (0)20 7201 8989
J.P. Morgan Cazenove (Corporate Broker)
William Simmonds
Jérémie Birnbaum +44 (0)20 7742 4000
Rothschild & Co (M&A Adviser)
Ali Kazmi
Alice Maynell
Nitant Gupta +44 (0)20 7280 5000
+44 (0) 7807 296
FTI Consulting LLP (Communications Adviser) 032
Mitch Barltrop +44 (0) 7703 330
Ed Berry 199
Gina Magnin +44 (0) 7815 585
dgi9@fticonsulting.com 751
LEI: 213800OQLX64UNS38U92
NOTES TO EDITORS
Digital 9 Infrastructure plc (DGI9) is an investment trust
listed on the London Stock Exchange. The Company invests in the
infrastructure of the internet that underpins the world's digital
economy: digital infrastructure.
The number 9 in Digital 9 Infrastructure comes from the UN
Sustainable Development Goal 9, which focuses the fund on
investments that increase connectivity globally and improve the
sustainability of digital infrastructure. The assets DGI9 invest in
typically comprise scalable platforms and technologies including
(but not limited to) subsea and terrestrial fibre, data centres,
and wireless networks.
With its IPO in March 2021 and three subsequent placings, DGI9
has raised total equity of GBP845 million, with a further GBP300
million through a revolving credit facility, and invested into data
centres, subsea fibre, and wireless networks:
-- Aqua Comms , a leading owner and operator of 20,000km of the
most modern subsea fibre systems - the backbone of the internet -
with a customer base comprising global tech and global
telecommunications carriers (April 2021);
-- Verne Global , the leading Icelandic data centre platform,
with 40MW of high intensity computing solutions in operation or
development, powered by 100% baseload renewable power (September
2021);
-- EMIC-1 , a partnership with Meta on a 10,000km fibre system
from Europe to India (July 2021);
-- SeaEdge UK1 , a data centre and landing station for the North
Sea Connect subsea cable, part of the North Atlantic Loop subsea
network, improving connectivity between the UK, Ireland,
Scandinavia and North America (December 2021);
-- Host Ireland , a leading enterprise broadband provider that
owns and operates Fixed Wireless Access networks (April 2022);
-- Volta , a premier data centre based in central London,
providing 6MW retail co-location services (April 2022);
-- Ficolo , a leading Finnish data centre and cloud
infrastructure platform, with c.23MW of data centre capacity,
powered by 100% renewable power and distributing surplus heat to
district heating networks (announced April 2022); and,
-- Arqiva , the only UK national terrestrial television and
radio broadcasting network in the United Kingdom - providing data,
network and communications services, as well as a national IoT
connectivity platform (announced June 2022).
The Investment Manager is Triple Point Investment Management LLP
(" Triple Point ") which is authorised and regulated by the
Financial Conduct Authority, with extensive experience in
infrastructure, real estate and private credit, while keeping ESG
principles central to its business mission. Triple Point's Digital
Infrastructure team has over US$ 300 billion in digital
infrastructure transaction experience and in-depth relationships
across global tech and global telecoms companies. For more
information, please visit www.triplepoint.co.uk .
The Company's Ordinary Shares were admitted to trading on the
Specialist Fund Segment of the Main Market of the London Stock
Exchange on 31 March 2021.
For more information, please visit www.d9infrastructure.com
.
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