AXA Investment Managers, through its alternative investments unit AXA IM Alts, and Swiss Life, via its division Swiss Life Asset Managers, today announced that, in a new joint venture, they have agreed to acquire lyntia Networks, a dark and enterprise fiber provider in Spain, from Antin Infrastructure Partners, an infrastructure private equity firm.
Press reports in Spain indicate that lyntia Networks was sold by Antin Infrastructure to AXA IM Alts and Swiss Life for more than €2.0bn ($2.1bn USD). Based on lyntia Networks’ EBITDA of ~€96m ($101m USD), this transaction implies a valuation of ~22x EBITDA. In terms of timing, the lyntia Networks transaction is expected to close by the end of 2022.
Separately, Antin Infrastructure is not selling the other half of lyntia, which is known as lyntia Access, a wholesale fiber-to-the-home (FTTH) operator, providing connectivity to residential properties in Spain, with over 2.4 million homes passed. Recall that lyntia was separated into two different companies – Networks and Access – and marketed in two distinct but parallel sale processes. Ultimately, Antin Infrastructure decided to suspend the lyntia Access sale process and will continue to own and operate that business.
lyntia Networks – Overview
lyntia Networks is a neutral wholesale fiber operator in Spain offering both lit (enterprise) and dark fiber services. The business owns and operates nationwide metro (intra-city) and long-haul (inter-city) fiber networks spanning 27.0k miles (43.6k kilometers). This network is built primarily alongside electric power and gas distribution infrastructure of utility companies including Naturgy, Iberdrola, and Endesa.
lyntia Networks provides services to 2.7k towns and cities across Spain, including major cities like Madrid, Barcelona, Valencia, Seville, and Bilbao. This fiber network connects to 60k on-net buildings and 100k near-net buildings throughout Spain.
Additionally, lyntia’s network connects to major subsea cable landing stations in Spain and Portugal. Finally, the network has international terrestrial interconnection links with France and Portugal.
lyntia Networks’ revenues are underpinned by long-term contracts to large companies, including carriers and utility companies. Additionally, lyntia Networks will continue to support lyntia Access, providing them with XGS-PON, which supports 10 gigabit per second (Gbps) symmetrical data transfer across Spain.
Upon completion of the transaction, José Antonio López, will remain as CEO of lyntia Networks, while Eduardo Taulet will continue with Antin Infrastructure as CEO of lyntia Access.
Transaction Advisors – AXA IM Alts, Swiss Life, Antin Infrastructure
AXA IM Alts and Swiss Life’s financial advisors were Rothschild and DC Advisory (debt advisory). Additionally, AXA IM Alts and Swiss Life’s legal advisors were Uría Menéndez and Gibson Dunn.
Antin Infrastructure’s financial advisors were Deutsche Bank, UBS, and Banco Santander. Also, Antin Infrastructure’s legal advisor was Herbert Smith Freehills.
Long-Term Digital Infrastructure Capital
The sale of lyntia Networks by Antin Infrastructure, a value-add infrastructure private equity firm, to AXA IM Alts and Swiss Life, which have long-term investment objectives, showcases the desire for core capital providers to invest in digital infrastructure. At the parent level, both AXA and Swiss Life are insurance companies and, as such, their asset management divisions seek longer duration, lower risk, and lower return investments – whether they are managing assets for third-party clients or for insurance mandates.
Similarly, in December 2021, KKR, investing through its core infrastructure strategy, agreed to acquire a 49% stake in Red Eléctrica’s Reintel, a dark fiber operator in Spain, at a €2.3bn valuation, equating to 22.1x EBITDA. Indeed, Reintel is a similar business to lyntia Networks, it was purchased by a similar core buyer profile, and was valued at a comparable multiple. To this end, both AXA IM Alts and Swiss Life were reportedly interested suitors of Reintel that did not prevail in the sale process.
Beyond lyntia Networks and within digital infrastructure, AXA IM Alts is a shareholder in XP Fibre (formerly SFR FTTH Network), an alternative fiber-to-the-home (FTTH) infrastructure wholesale operator in France. Additionally, AXA IM Alts owns DATA4, a wholesale data center operator in France, Italy, Spain, and Luxembourg. Finally, the firm has also invested $210m in a 215k sqft data center in Tokyo, Japan.
In contrast, Swiss Life appears to be making its first direct equity investment in digital infrastructure through lyntia Networks. Moreover, this investment is at scale, with Swiss Life noting that it will “become the largest investor in lyntia Networks”.