3i Infrastructure Sells its Stake in WIG in £575m Deal

3i Infrastructure sells its stake in WIG for £575m

20 December 2019 | Jason McGee-Abe

Cover

3i Infrastructure plc has agreed to sell its 93% stake in Wireless Infrastructure Group (WIG) to Brookfield Infrastructure.

The transaction creates a platform to explore more strategic infrastructure combinations with mobile operators together with an opportunity to accelerate WIG's efforts to transform indoor connectivity for real estate owners. 

“We are very pleased to be partnering with the management team at WIG to support their continued growth,” said Sam Pollock, CEO of Brookfield Infrastructure (pictured).

“We have been impressed by the company's accomplishments to date and look forward to supporting WIG's continued expansion, both in products and geographies. WIG is our first investment in UK data infrastructure and underpins our commitment to both the sector and country."

The sale values the company’s stake in WIG, the independent wireless infrastructure operator headquartered in the UK, at approximately £387 million, compared to a valuation of £291 million at 30 September 2019. This equates to an enterprise value for WIG of £575 million, and will result in a 27% gross IRR and a 1.7x gross money multiple for 3i Infrastructure.

Completion of the transaction is expected to follow very shortly, with approximately half of the proceeds payable immediately, a quarter payable unconditionally in 12 months and a quarter payable unconditionally in 24 months.

“This sale arises unexpectedly but in the context of a changing competitive landscape in the UK mobile towers sector where scale is increasing in importance, with a number of potential tower portfolio transactions anticipated to take place next year,” said Phil White, managing partner and head of infrastructure at 3i Investments, and investment manager of the company.

“In the process of preparing to position WIG for such a transaction, we received a compelling offer from Brookfield Infrastructure which, after careful consideration, we decided to accept. We concluded that it is better for shareholders that we sell our interest in WIG at this attractive price and look to recycle the capital into new opportunities. We are proud of WIG’s achievements during the period of our ownership. We are confident that it will continue to prosper in future under new owners and with the continued strong leadership of CEO Scott Coates and his management team.” 

Commenting on the deal, Scott Coates, CEO of WIG, added: "We are delighted to welcome Brookfield as our shareholder and for the opportunity to partner with large-scale patient capital. Brookfield is one of the world's largest infrastructure investors and its focus on data infrastructure and developing assets that can transform communities, aligns with our ambition to help improve connectivity across the UK.

"After a successful partnership with 3i, this deal marks an opportunity to shift gears for WIG. With the backing of large-scale capital, WIG is now ideally positioned to explore more strategic infrastructure combinations with mobile operators. WIG's industry-leading indoor networks already serve buildings with over 1.25 billion visitors a year and this transaction brings us alongside one of the world's largest real estate owners."

Following its launch over ten years ago, WIG has invested in over 2,000 communications assets across the UK and has also established operations in the Netherlands and Ireland. The company is headquartered in Edinburgh with key offices in Solihull, Bellshill and London.

3i Infrastructure invested £75 million to acquire a minority interest in WIG in April 2016 to support the growth of the business. In January 2018, 3i Infrastructure invested a further £187 million to increase its equity ownership to 93%.

WIG builds and operates communications towers in rural and suburban areas, together with neutral host networks to enable mobile coverage in buildings and on city streets. It is an independent operator and invests in high capacity infrastructure that is made available to all networks.

Over the past three years, WIG has achieved significant growth and has become a leading provider of indoor mobile infrastructure to buildings right across the UK. Under the company’s ownership, WIG has also grown its international footprint through the development of its Dutch and Irish tower portfolios, while supporting its mobile customers in the UK through delivery of 4G rollout, new tower builds, and bolt-on tower portfolios.

Following completion of this sale and of the sale of 3i Infrastructure’s UK operational projects portfolio, announced on 6 December 2019, the updated pro forma cash position of the company will be approximately £390 million.

The investment manager continues to work on a range of potential new investment opportunities and will assess carefully the appropriate level of cash to maintain as the deal pipeline evolves.

Brookfield Infrastructure Partners recently entered into an agreement with Reliance Industrial Investments, a subsidiary of Reliance Industries, for an investment of $337 million (Rs 25,215 crore).