KKR enters UK market after £500m Hyperoptic deal

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US private equity firm KKR has entered the UK market for the first time after acquiring a majority stake in full-fibre provider Hyperoptic.

Although financial details of the transaction were not disclosed it is rumoured to be valued around £500 million.

KKR completed the acquisition of a majority stake in one of the UK’s largest residential gigabit broadband provider from funds managed by Newlight Partners LP and Mubadala Investment Company.

“We are incredibly grateful to Newlight and Mubadala for their unwavering support and significant contributions to the success of Hyperoptic. Currently, only 8% of the UK has access to full fibre and less than half of that to symmetrical gigabit services,” said Dana Tobak, CEO of Hyperoptic.

“We are confident that with the support of KKR and their significant expertise enabling high-growth businesses, our ambitious infrastructure plans to build our hyperfast network out to two million homes by 2021 and five million by 2024 will be realised.”

Hyperoptic will continue to be led by Tobak as CEO and Boris Ivanovic as executive chairman. Founded in 2011, Hyperoptic benefits from a full fibre network covering 43 towns and cities across the UK, with gigabit broadband services passing almost 400,000 homes and businesses.

Vincent Policard, member, and Cristina Gonzalez, director in European Infrastructure at KKR, added: “Hyperoptic has a market-leading position and superior consumer product. The business is strongly positioned to meet the growing demand for full-fibre services in the UK through further investment and national roll-out, supporting housing development and renovation. Our investment in Hyperoptic builds on KKR’s strong track record in telecommunications infrastructure in Europe, investing in and deploying next-generation digital connectivity.”

KKR’s investment builds on the firm’s track record as an owner and operator of European telecommunications infrastructure, including major joint ventures with Telxius and Altice in Spain and France respectively focused on mobile connectivity and towers, along with its ownership of Deutsche Glasfaser, a German fibre broadband provider.

David Wassong and Ravi Yadav, co-managing partners at Newlight, said, “We are extremely proud to have partnered with the Hyperoptic team during its formative years to build the leading fibre broadband provided in the UK. The rollout of its hyperfast network is poised to expand rapidly in the next few years and we will continue to cheer them on from the sidelines.”

There is strong potential for future deployment of full fibre services in the UK and Hyperoptic forecasts that its gigabit capable fibre network will quadruple in the next three years.

“Mubadala is proud to have been part of the Hyperoptic journey. Our ICT sector strategy is focused on investments in high growth companies with excellent management, and Hyperoptic is a prime example of that,” added Mounir Barakat, executive director of ICT, Mubadala.

The investment in Hyperoptic is being made through KKR’s Global Infrastructure Investors Fund III.

The news comes as the UK government has opted not to pursue its target of delivering full-fibre broadband to all households by 2025.

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