Aqua Comms to be bought for $215m if new investor raises £400m in IPO

Jack Waters 995x560.jpg

An investment group is planning to raise £400 million on the London Stock Exchange to invest in digital infrastructure, including subsea operator Aqua Comms.

Triple Point Investment Management has launched the initial public offering (IPO) for a new company, Digital 9 Infrastructure (DGI9), which plans to invest in a number of ventures.

Aqua Comms, which owned the AEC-1 and AEC-2 cables, is explicitly named in the offer document published this week.

“Following initial admission [to the Stock Exchange], the company will acquire Aqua Comms, a platform owning and operating some 14,300km of the most reliable and resilient trans-Atlantic subsea fibre systems — the very ‘backbone’ of the internet,” says the offer document.

Capacity understands that this is not a hostile takeover, but is done with full knowledge of the main shareholders in Aqua Comms.

DGI9 is chaired by Jack Waters (pictured), who was COO of Zayo until October 2020. Before that he was CTO of Level 3 Communications for 18 years until 2016. He became non-executive chair of DGI9 this month.

He is joined on the DGI9 board by Lisa Harrington, who spent 10 years at BT, including a spell as the group’s chief customer officer, and is now interim managing director of infrastructure at UK-based fibre operator Hyperoptic.

According to one close observer, the project is almost a UK version of Digital Colony, the US investor that last year bought Zayo for $14.3 billion in a 50-50 acquisition with Swedish investor EQT.

“It’s a very aligned thing for Aqua Comms,” Capacity was told by someone close to the planned deal. “There are a number of infrastructure funds emerging.”

Aqua Comms will not be acquired until after the IPO of DGI9 is completed and its shares start trading on the London Stock Exchange.

But it looks as though there are more possible infrastructure acquisitions to follow, though none has yet emerged.

The DGI9 offer document says: “The company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The portfolio will comprise future proofed, non-legacy, scalable platforms and technologies including (but not limited to) subsea fibre, data centres, terrestrial fibre, tower infrastructure and small cell networks (including 5G).”

The document adds: “The company will focus, primarily, on digital infrastructure investments which are operational and with an existing customer base.”

James Cranmer, managing partner of Triple Point, said the investments the trust make would be long term in nature, focusing on stable cash flows and have environmental, social and governance considerations at their core.

“From day one, DGI9 will deliver returns underpinned by 20-year plus contracted revenue from some of the largest companies in the world, including Facebook, Apple, Amazon, Netflix, Google and Microsoft.”

The aim is to acquire Aqua Commis “in its entirety at a valuation of US$215 million on a cash free, debt free basis”, says DGI9.

Assuming DGI9 raises its target £400 million and then secures third-party debt Aqua Comms will represent 30% of the gross asset value of DGI9.

The deadline for applications for shares under the IPO is 11:00 UK time on Thursday 25 March. Dealings will start on the London Stock Exchange on Wednesday 31 March.

Last December Aqua Comms launched America Europe Connect-2 (AEC-2), its second trans-Atlantic subsea cable system.

The new system complements Aqua Comms’ existing AEC-1 (America Europe Connect-1) cable which became ready for service in 2016.

AEC-2 starts from NJFX, a carrier-neutral cable landing station and Tier 3 colocation facility in New Jersey.