APG, the manager for Dutch pension fund ABP, today announced that it has agreed to increase its existing investment in SiFi Networks America Limited by acquiring a 16.7% direct equity stake in the company and establishing a joint venture (Fiber JV) to roll-out open-access fiber-to-the-home (FTTH) networks in the United States. As part of this transaction, APG is making a $500m equity commitment to the Fiber JV. To-date, SiFi Networks has been sponsored by the Smart City Infrastructure Fund, a fund managed by Whitehelm Capital, an infrastructure private equity firm, and backed by APG, as its cornerstone investor.
For SiFi Networks’ new Fiber JV, Whitehelm Capital will provide asset management services to the APG-led joint venture during the fiber roll-out period.
SiFi Networks – Overview
SiFi Networks builds and operates citywide, open-access fiber networks across the United States. The company’s fiber networks serve a combination of consumers, internet service providers (ISPs), and cities. Through fiber infrastructure, SiFi Networks can provide reliable and fast residential internet connections.
Presently, the company is constructing fiber-to-the-home (FTTH) networks in three cities and has signed development agreements with additional cities.
Fiber-to-the-Home (FTTH) – Current Deployments
SiFi Networks is currently deploying fiber in three cities on the West and East coasts of the United States:
- Fullerton, California: $75m investment in a fiber network passing 54k+ homes and businesses. Presently, live customer connections are commencing
- Placentia, California: fiber network will pass 20k+ homes and businesses in Placentia and is expected to be complete in 2023
- Salem, Massachusetts: fiber network will pass 22k+ homes and businesses in Salem and is expected to be complete in 2022
As a point of reference, each of these three cities have populations ranging from 40k to 140k inhabitants.
Open Access Wholesale Fiber Network
SiFi Networks’ open-access business model allows multiple internet service providers (ISPs) to deliver their services on SiFi’s fiber network. For example, this includes retail services such as internet, TV, and voice, to residents and businesses throughout an entire city.
In turn, this open-access business model allows consumers to have optionality regarding the internet service provider (ISP) they choose.
SiFi Networks’ fiber facilitates new Smart City services in key urban situations, such as traffic control signals, streetlighting control, CCTV operations, and emergency services. Additionally, SiFi’s fiber networks allow for the expansion of 5G services (i.e., backhaul) and Internet of Things (IoT) networks.
SiFi Networks – U.S. Fiber-to-the-Home (FTTH) Roll-Out
Following APG’s incremental financial backing, SiFi Networks expects to deploy “billions of dollars” of capital expenditures over the coming years into open-access fiber-to-the-home (FTTH) networks in the United States.
SiFi Networks’ fiber deployments will bring high-speed internet, through fiber connections, to underserved communities of the United States. Specifically, the Fiber JV is targeting areas of the United States which have not been a high priority for the large telecom providers to build fiber connections.
SiFi Networks is working alongside its delivery partners, to ultimately deploy fiber in 40+ cities across the United States. In total, these cities comprise 1.5+ million homes and businesses.
As shown above, examples of SiFi Networks’ deployment plans by state and city include:
- California: Lancaster (61k units), Palmdale (51k units), Simi Valley (45k units), Rancho Cordova (35k units), Pittsburg (20k+ units)
- Connecticut: East Hartford (23k+ units). Additionally, SiFi expects to complete construction of the East Hartford network in 2023, with initial customers going live in 2022
- Illinois: Rockford (81k units), Decatur (41k units)
- Michigan: Farmington Hills (43k units), Farmington (6k units)
- New York: Saratoga Springs (15k+ units)
- Texas: Arlington (172k units)
- Wisconsin: Kenosha (47.4k units)
Initially, SiFi Networks will deploy fiber infrastructure capable of delivering 1 gigabit per second symmetrical capacity (i.e., upload and download). Subsequently, this fiber will have the potential to be upgraded to offer speeds of up to 10 gigabits per second.
APG notes that fiber infrastructure aligns with the firm’s view on energy transition, as fiber is more energy efficient than legacy copper or cable networks.
Smart City Infrastructure Fund (SCIF) – APG, Whitehelm Capital
The Whitehelm Capital-managed Smart City Infrastructure Fund (SCIF) has €750m of equity capital commitments solely from APG. Specifically, APG made its initial €250m commitment in November 2018, followed by an incremental €500m commitment in early September 2021.
Notably, the Smart City Infrastructure Fund’s inaugural investment was the partnership with SiFi Networks to deploy fiber in Fullerton, California.
Finally, beyond the SCIF, APG has made recent fiber-to-the-home (FTTH) investments with KPN in the Netherlands and Orange in Poland.
Transaction Advisors – APG, SiFi Networks
APG’s financial advisor was Deutsche Bank. Additionally, APG’s legal advisor was Weil, Gotshal & Manges.
SiFi Networks’ financial advisor was Greenhill & Co. Additionally, SiFi Networks’ legal advisors were Birketts and Seyfarth Shaw.