HGC owner buys GTT Infrastructure for $2.15bn

Breaking: HGC owner buys GTT Infra for $2.15bn

16 October 2020 | Alan Burkitt-Gray

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The US private equity company that already owns Hong Kong’s HGC Global Communications has bought the infrastructure division of GTT for US$2.15 billion.

I Squared Capital (ISQ) will add the GTT acquisition to HGC, for which it paid $1.9 billion in late 2017.

Gautam Bhandari, managing partner at I Squared Capital, said today: “Now more than ever, digital infrastructure is an essential asset class as societies across the globe rely heavily on high-speed digital bandwidth. This acquisition builds upon I Squared Capital’s overarching global digital infrastructure strategy and experience with complex carve-outs to expand the reach of our platforms across Asia, Europe and North America.”

Two years ago ISQ said it had raised $7 billion for further infrastructure investments. For a period in 2019 it was tipped as a potential purchaser of Global Cloud Xchange. 

GTT Communications said it has signed “a definitive purchase agreement to sell its infrastructure division” to the New York-based private equity investor.

The infrastructure division consists of what GTT called “selected network and data centre assets accumulated from several GTT acquisitions, including Interoute, Hibernia and KPN International.” 

KPN International was GTT’s last purchase before its share price collapsed so that its market cap to barely $300 million.

Ernie Ortega, GTT’s interim CEO, said: “The deal enables GTT to reinforce its capex-light business model as well as its cloud networking focus and will benefit both enterprise and infrastructure clients alike.”

He said the infrastructure division was “highly differentiated”. The sale “will ensure greater focus on network investment and development of high-speed infrastructure services under the more specialised ownership of this experienced investor”.

The deal includes a 103,000 route-km fibre network with over 400 points of presence, spanning 31 metro areas and interconnecting 103 cities across Europe and North America – mainly the old Interoute network.

It also includes three transatlantic subsea cables, including GTT Express – formerly Hibernia  the lowest latency route between Europe and North America.

GTT is including 14 Tier 3 data centres and over 100 colocation facilities in the deal.

The companies said the acquisition is expected to close during the first half of 2021. The total consideration includes an upfront cash payment of $2.02 billion at closing and total deferred payments of up to $130 million based on certain financial results.