3i Infrastructure to acquire GCX for $512m
3i Infrastructure has agreed to invest approximately $512 million to acquire a 100% stake in Global Cloud Xchange (GCX).
“GCX provides an essential service to its customers and operates in an industry with high barriers to entry," said Richard Laing, chair of 3i Infrastructure.
"GCX is a great addition to the Company’s portfolio, in a sector we have been keen to invest further into and will provide an attractive yield to 3i Infrastructure.”
Under the terms of the deal, 3i Infrastructure will partner with GCX’s management team to invest in a 'leading platform in the sector' and aims to increase the capacity on GCX’s existing routes as well as to add new routes and customers.
“We are very excited to have 3i Infrastructure’s backing," said Carl Grivner (pictured), CEO GCX.
"We will benefit from the team’s experience of investing in telecommunications infrastructure as well as their international network and experience of supporting companies to grow. We look forward to partnering with 3i Infrastructure to accelerate our growth and strengthen our platform.”
GCX delivers high-bandwidth connectivity to a range of blue-chip customers including hyperscalers, telecoms operators, new media providers and enterprises. Its 66,000km of subsea cables span 46 countries from North America to Asia.
“GCX is one of the most comprehensive subsea cable networks globally, with a unique network on strategically important routes," said Phil White, managing partner and head of infrastructure, 3i Investments plc, investment manager of the company.
"We are delighted to be backing Carl Grivner and his experienced management team to continue GCX’s growth.”
The deal due to completed mid-2022, subject to certain regulatory approvals.
The news follows GCX's emergence from its Chapter 11 bankruptcy process, initiated in 2019, as a result of the financial restructure. In January of this year, Grivner has said the company is looking forward to a "new era of growth" and it is "emerging as an energised future-focused company offering new solutions for its customers".
Following this, July saw the company report strong FY21 results, with its cash revenue growing by 6.6% to $271.2 million year-on-year. For the period ending 31 March 2021, GCX managed to stabilise revenue following four consecutive quarters of decline as well as strengthening its cash flow through the pandemic.
In addition to increased revenues, due in part to strong recurring revenue and IRU sales, the company also reported cuts of $36.7 million to its total expenses, a 10-fold increase of $59.4 million to its cash EBITDA and recurring EBITDA of $18.1 million, YoY.