Cordiant snaps up assets in Czech Republic and Norway

04 May 2021 | Melanie Mingas

Cover

Cordiant Digital Infrastructure, the UK's first digital infrastructure fund, has acquired its first digital assets.

Using "substantially all of the net proceeds" of its February IPO – which exceeded its target by £70 million – the company has acquired České Radiokomunikace (CRA) in the Czech Republic and entered into a legally binding agreement in Norway to acquire "a fibre network and certain land for data centre development".

Cordiant raised £370 million in February and has invested £318 million across the two deals, leveraging £133 million in debt to complete the acquisitions.

That leaves a pool of £43.4 million in uninvested proceeds from the IPO, with Cordiant saying it has seen considerable growth in "well-advanced and complementary transaction opportunities" in US, Canada, Scandinavia and other European markets.

Cordiant said its acquisitions provided it "stable, cash generative assets with long-term contracts in operational areas the Cordiant Capital team understands well".

Codiant chairman Shonaid Jemmett-Page said: "Our manager has been able to swiftly deploy the substantial majority of the IPO proceeds into compelling platform transactions, in addition to developing an advanced pipeline of further investment opportunities. These significant maiden investments provide an attractive source of income and we are pleased to be able to announce a significant acceleration in the quantum of dividends that the Company intends to distribute."

These initial deals have seen the company update its dividend guidance. Previously set at one penny per share in the first year, this has now increased to a dividend of three pence per share in respect of its first financial year ending 31 March 2022.

The progressive targets for subsequent years remain in place, rising to four pence a share by the fifth financial year.

The assets

The resulting portfolio of assets comprises 660 TV, radio and telecommunications towers; around 3,000 microwave connections; a network of approximately 4,850km of optical fibre; and six edge data centres.

Steven Marshall, chairman digital infrastructure, Cordiant Capital Inc. said: "We are delighted to have acquired these attractive digital infrastructure platforms. CRA is a national champion with an unrivalled portfolio of assets in a core European country. We are excited to be partnering with their strong management team, its employees, and other stakeholders in order to continue building CRA as a leading digital infrastructure platform serving the broadcast, telecommunications and data centre markets.

"The Norwegian long-distance fibre-optic network is profitable and ideally located to support future growth in the digital infrastructure market in Scandinavia. We look forward to supporting further expansion and growth of this network with the existing management team," Marshall added.

In Norway, Cordiant has entered into a binding letter of intent to acquire an extensive fibre-optic network linking regions of Norway to Scandinavia and the "population densities of the core of Europe beyond".

The network, which is approximately 50% unleased, counts telecommunications operators, industrial companies and utilities providers as customers. With around 50% of its fibres still up for investment, combined with the favourable local energy prices, Cordiant said this deal offered "significant potential to increase revenues with existing and new customers – such as data centre operators", as it looks to establish a Nordic data platform.

On this point, the company has also signed an agreement to invest in strategically-located Norwegian land parcels with substantial – and sustainable – power supply.

"Scandinavia is expected to attract increasing investment in data centres and require augmented fibre optic capacity," Cordiant said.

Meanwhile in the Czech Republic, Cordiant has acquired CRA from Macquarie, in a deal inclusive of 660 telecommunications towers, 3,730-kilometres of fibre, a nationwide network of mobile towers, "strategically located" data centres, and 86 television and 97 radio broadcasting sites, which Cordiant said would be "challenging to replace or replicate".

Here the growth opportunities will include supporting mobile operators with infrastructure as well as in expanding the size and reach of the data centre platform. And there's more.

The CRA network already supports smart metering for water, electricity and gas for companies including E.ON and RWE. However, Marshall, who was previously the president of American Tower Corporation, is also the former CEO of National Grid Wireless and CRA said that through its new ownership it saw "significant potential to expand CRA's early, successful, network offerings in IoT", particularly for utilities provision.

There were no specific updates on management and leadership jobs, or general headcounts, however Cordiant did say that it "looks forward to working with CRA's experienced and accomplished management team".