CityFibre Infrastructure Holdings, a UK fiber-to-the-premises (FTTP) overbuilder, today announced that it has completed a £4.9bn debt raise, comprising £3.9bn of committed facilities and a £1bn uncommitted accordion facility, which allows for commitments to be increased based on further fiber builds being added to CityFibre’s business plan. Notably, the recently established UK Infrastructure Bank (UKIB) participated as a cornerstone lender in CityFibre’s debt raise, making a £200m commitment, equivalent to ~5% of the total committed facilities.
Overall, the debt raise was underwritten by NatWest, Société Générale, Crédit Agricole CIB, BBVA, Intesa Sanpaolo, ING, and SEB. Additionally, core lenders included ABN AMRO, Lloyds Bank, and M&G Investments, which is part of M&G Group, an asset manager for the long-term savings of 5+ million people.
CityFibre – Debt and Equity Fund UK Fiber Roll-Out
CityFibre is the largest alternative fiber-to-the-premises (FTTP) provider in the UK with its network presently passing 1.7 million homes. However, of CityFibre’s total passings, only 1.5 million (88%) of the homes, across 60+ UK cities, are ready for service – whereby end users can receive broadband service. Additionally, by the end of 2022, CityFibre expects to have fiber builds ongoing in 150+ cities, towns, and villages in the UK.
Use of Proceeds
CityFibre’s £4.9bn debt raise closely follows the company’s recent £1.125bn equity raises from investors including Mubadala Investment Company, Abu Dhabi’s sovereign wealth fund, and Interogo Holding, an investment vehicle for furniture company IKEA Group. Together, these debt and equity financings, will fully fund the completion of CityFibre’s business plan:
By year-end 2025, CityFibre targets having its fiber network pass 8 million homes (1/3rd of the UK market) across 285 cities, towns, and villages in England and Scotland. Furthermore, CityFibre’s plan envisages fiber deployments to 800k businesses, 400k public sector sites, and 250k 5G access points in the UK.
Additionally, CityFibre’s debt and equity financing will enable the company to increase its bidding participation for contracts under the Project Gigabit rural program, managed by Building Digital UK (BDUK). In turn, CityFibre would be able to extend its fiber networks to rural areas surrounding the 285 cities, towns, and villages identified in its existing roll-out plans.
Wholesale Fiber-to-the-Premises (FTTP)
CityFibre has wholesale agreements in-place with over 30 consumer internet service providers (ISPs) in the UK. Specifically, these agreements are with national ISPs Vodafone, TalkTalk, and Zen Internet, which have made long-term commitments of both residential and business customers. Also, CityFibre has signed contracts with ISPs including Air Broadband, Highnet, Triangle Networks, Trunk Networks, Giganet, Quickline, and purebroadband.
UK Government Targets
CityFibre is supporting the UK Government’s targets of bringing national gigabit-capable broadband coverage to 85% of premises by 2025 and at least 99% of premises by 2030.
CityFibre’s financial advisors were NatWest and Société Générale. Additionally, CityFibre’s legal advisor was Latham & Watkins. Finally, the UK Infrastructure Bank (UKIB) was supported by Lloyds in coordinating its £200m debt financing commitment to CityFibre.
CityFibre’s key shareholders are Antin Infrastructure Partners (Fund III), West Street Infrastructure Partners (Goldman Sachs’ Merchant Banking Division), Mubadala Investment Company, and Interogo Holding.
UK Infrastructure Bank (UKIB) – CityFibre and Beyond
The UK Infrastructure Bank (UKIB) opened for business in June 2021, as part of the Government’s National Infrastructure Strategy. Specifically, UKIB’s objectives are to help tackle climate change and to support regional and local economic growth across the United Kingdom.
To-date, UKIB has announced 7 transactions, which include digital infrastructure deals in Northern Ireland through Fibrus, and rural England through Gigaclear.