Goldman Sachs Backed Broadband Company to Close Investment Deal with Abu Dhabi Fund

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An investment group that includes the Abu Dhabi sovereign wealth fund is set to acquire a minority stake in CityFibre Infrastructure Holdings in a deal that would value the UK fiber-optic provider at more than $ 2.7 billion dollars, according to people familiar with the matter.

The investment is believed to come from Abu Dhabi’s Mubadala Investment Co. and the family-related investment arm behind IKEA, the people said.

It comes as wholesale broadband network providers like CityFibre and incumbent telecom operators like AT&T Inc. in the United States and Britain’s BT Group PLC strive to expand their broadband networks to achieve more. customers and support the deployment of lightning-fast 5G wireless services.

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At the same time, the promise of recurring revenue generated by high-speed transmission of video and other bandwidth-hungry data is attracting investors seeking long-term stable returns.

The deal, if finalized, is expected to be announced in the next few weeks and would value CityFibre at more than £ 2bn, or $ 2.7bn, people said.

Khaldoon Al Mubarak, CEO of Mubadala Investment Co., attends a panel discussion at the Bloomberg Invest Asia Forum in Hong Kong, China, Thursday, March 21, 2019. Photographer: Anthony Kwan / Bloomberg via Getty Images

CityFibre is controlled by an infrastructure arm of Goldman Sachs Group Inc. and European buyout firm Antin Infrastructure Partners, which together acquired the business in 2018 for £ 537.8million.

London-based CityFibre is expected to raise more than £ 500million from the sale of its stake to Mubadala and Interogo Holding AG, a Switzerland-based vehicle that invests in infrastructure and other assets to generate returns and help secure IKEA independence.

Mubadala oversees a total of around $ 243 billion in assets and a bet on CityFibre would be consistent with previous investments in the sector. In 2018, the fund acquired a minority stake in Hyperoptic Ltd., another broadband provider in the UK, for an undisclosed amount. He then sold this stake the following year to the American buyout company KKR & Co.

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CityFibre also plans to issue new debt as part of the deal, the people said, giving the broadband network provider a total of around £ 1bn in fresh money to help fund the rollout. of its network.

CityFibre’s networks are located in more than 60 cities across the UK, according to its website. Customers include Vodafone Group PLC, which uses the networks to provide high-speed internet service in parts of Great Britain, and Three from the UK to support its 5G wireless services. Three is owned by Hong Kong-based conglomerate CK Hutchison Holdings Ltd.

The new funding is expected to support CityFibre’s existing plan to invest £ 4 billion to expand its services to 216 other towns and villages by 2025, as it seeks to cover nearly a third of the UK market.

Still, Mubadala and Interogo’s investment in CityFibre comes with risks, coming amid signs of increasing competition.

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BT, which also offers wholesale broadband services, said in May that it may seek a partner to accelerate the rollout of its fiber optic network to reach 25 million premises in the UK by 2026, against a previous target of 20 million. In July, Virgin Media O2, jointly owned by Liberty Global PLC of John Malone and Spain’s Telefónica SA, announced its intention to modernize its network, paving the way for its potential entry into the wholesale broadband market in Canada. UK.


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