Harmoni Towers, an owner and operator of cell towers, which is backed by Palistar Capital (formerly known as Melody Investment Advisors), has agreed to acquire Parallel Infrastructure, a build-to-suit (BTS) cell tower operator in the United States, which is sponsored by Apollo Global Management.

The combination of Harmoni Towers and Parallel Infrastructure forms a tower company with more than 2,000 built and under construction towers in the United States. As such, Palistar Capital claims that, in the United States, this transaction creates the 5th largest tower company (following American Tower, Crown Castle, SBA Communications) and the 2nd largest private independent tower company (behind Vertical Bridge).

READ MORE: Top 100 Cellular Towers Companies in the World as of 2022

Finally, the transaction is subject to customary closing conditions and is expected to complete in Q3 2022.

Scaling the Business – Harmoni Towers and Parallel Infrastructure

Initially, the combined Harmoni Towers and Parallel Infrastructure business will have cell tower locations spanning 41 states across the U.S. Moreover, the company will have the capacity to build “hundreds of towers per year” in all regions of the United States.

READ MORE: How Much Does it Cost to Build a Cell Tower?

Over time, Palistar Capital plans to provide in excess of $1 billion, through equity and debt financing, to the combined Harmoni Towers and Parallel Infrastructure business. Specifically, this capital will support growth in the U.S. wireless ecosystem, demand for data, and implementation of 5G.

Harmoni Towers – Overview

Harmoni Towers is headquartered in Little Rock, Arkansas. The company is an active builder of cell towers in the United States, with over 1,000 sites constructed or in development.

Harmoni Towers – Cell Tower Locations

Historically, Harmoni Towers has been primarily building cell towers for AT&T. In total, the company has master lease agreements (MLAs) in-place with three out of the four major wireless carriers in the United States.

READ MORE: Cell Tower Lease (Rates, Agreements, Buyout, Value)

To this end, in February 2021, DISH Network signed an agreement with Harmoni Towers for the use of its towers as part of its 5G network build-out.

READ MORE: DISH Network Signs 7 Agreements for 4,000+ Towers

Management

Harmoni Towers is led by its Chief Executive Officer, Lawrence Gleason. Previously, Gleason was the President of Uniti Towers, a business unit of Uniti Group, since its inception in 2016. Prior to this role, Gleason was Founder and Chief Executive Officer of Summit Wireless Infrastructure. Gleason also previously held the position of Chief Operating Officer of Latin America at American Tower.

Ownership and Transaction History

Harmoni Towers is owned by Palistar Capital LP (formerly Melody Communications Infrastructure Fund II), which is Palistar Capital’s flagship fund.

READ MORE: Melody Raises $1.95bn for Communications Infrastructure

In June 2020, Melody Communications Infrastructure Fund II acquired 90% of Uniti Group’s U.S. tower business for total cash consideration of $225.8 million, implying a 34x EV/TCF (tower cash flow) multiple. Upon closing, this business took the brand name Harmoni Towers.

Subsequently, in June 2022, Palistar Capital, via Palistar Communications Infrastructure GP LLC, acquired the remaining 10% interest in Harmoni Towers from Uniti Group for total cash consideration of $32.5 million. This transaction implied a ~35x EV/TCF (tower cash flow) multiple.

Parallel Infrastructure – Overview

Parallel Infrastructure is based in Charlotte, North Carolina and designs, builds, owns, and manages telecommunications infrastructure, including a cell tower portfolio of about 1,000 sites in the United States.

Cell Tower Portfolio

Parallel Infrastructure’s constructed tower portfolio is located primarily in the Midwest, Southeast, and West regions of the United States. Geographically, the company has a significant presence of constructed cell towers in Illinois, Texas, Missouri, Indiana, and Michigan.

Parallel Infrastructure – Cell Tower Locations

READ MORE: Apollo’s Parallel Infrastructure Scaling Past 1,000 Towers

Contractual Rights

Parallel Infrastructure owns 65,000 miles of railroad corridor rights-of-way enabling the company to extend its tower management/leasing capabilities to railroad operator-owned infrastructure. Also, the company has access to 200+ military bases in the United States through which it facilitates connectivity services for wireless carriers.

Customers

Parallel Infrastructure primarily serves the United States’ largest wireless carriers including Verizon, T-Mobile, and AT&T, under long-term contracts. Additionally, in February 2021, DISH Network signed an agreement with Parallel Infrastructure for the use of its towers as part of its 5G network build-out.

Management

Parallel Infrastructure is led by its Chief Executive Officer, Yannis Macheras, who has been with the company since its founding. Prior to Parallel, Macheras spent over 14 years at American Tower, most recently as its Vice President, Latin America.

Ownership and Transaction History

Parallel Infrastructure is owned by Apollo Infrastructure Opportunities Fund II (AIOF II), which is Apollo Global Management’s second flagship infrastructure fund.

In October 2020, Apollo’s AIOF II acquired Parallel Infrastructure from Lendlease Group, an Australian real estate investor, for consideration of ~$280 million USD (A$390 million). Under Apollo’s ownership, Parallel Infrastructure “approximately doubled its size during the following two years”.

Transaction Advisors – Parallel Infrastructure, Harmoni

Apollo and Parallel Infrastructure’s legal advisor was Weil, Gotshal & Manges. Additionally, Palistar Capital and Harmoni Towers’ legal advisor was Kirkland & Ellis.

Palistar Capital – Overview

Palistar Capital is a digital infrastructure private equity firm led by Managing Partner and Founder, Omar Jaffrey. As of December 31, 2021, the firm had $2.2 billion of regulatory assets under management (AUM), on a discretionary basis.

Digital Infrastructure

Palistar Capital’s investment strategy focuses on mission-critical communications infrastructure (excluding satellites). Specifically, the firm’s investment scope includes: i) ground lease interests, easements, leased real estate, and owned real estate underlying wireless communications towers, structures, and rooftops, ii) macro tower build-to-suit (BTS) partnerships, iii) joint ventures with wireless carriers, and iv) other communications infrastructure (e.g., data centers and fiber).

Existing portfolio companies of Palistar Capital include:

  • CTI Towers: owns and manages over 1,200 wireless towers in the United States, following its recent acquisition of SCI Towers
  • Harmoni Towers: owns and operates more than 2,000 built and under construction cell towers in the United States, following completion of its pending acquisition of Parallel Infrastructure
  • Symphony Wireless: acquires and manages a cell site and telecom easements portfolio

Apollo Global Management – Overview

Apollo Global Management had approximately $515 billion of assets under management (AUM) as of June 30, 2022, across all of its alternative asset management strategies.

Digital Infrastructure

Apollo Infrastructure Opportunities Fund II (AIOF II) has over $2.5 billion in capital commitments and is Apollo Global Management’s second flagship infrastructure fund. AIOF II targets investing in mid-market infrastructure assets primarily across the sectors of communications, power & renewables, and transportation.

As of Q2 2022, Apollo’s AIOF II has made total equity commitments of $607.6 million which includes Parallel Infrastructure and a fiber-based carrier in the western United States called FirstDigital Telecom. Notably, Parallel Infrastructure will represent the first realization for Apollo’s AIOF II.

Separately, Apollo Investment Fund IX, another private equity vehicle, owns Brightspeed which plans to pass 3+ million consumer and business locations with fiber-to-the-premises (FTTP) following its $7.5bn acquisition of Lumen Technologies’ incumbent local exchange carrier (ILEC) operations in 20 states.

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