Digital 9 Infrastructure (LON: DGI9), an externally managed closed-end investment trust focused on digital infrastructure, today announced its plans for a new £200m ordinary share placing, alongside a €76m majority stake purchase in TETRA Ireland, an operator of public safety wireless networks across the Republic of Ireland. Both of these announcements closely follow the company’s disclosures, over the past month, of a $93m follow-on investment in Verne Global, a data center operator in Iceland, and the £15m acquisition of SeaEdge UK1, a data center and subsea cable landing station in Newcastle, England.
Collectively, over the past ~30 days, Digital 9 Infrastructure has made incremental investments and commitments of $200m+ USD (£145m+) to TETRA Ireland, Verne Global, and SeaEdge UK1. As such, Digital 9 Infrastructure’s total portfolio will comprise 5 investments in the digital infrastructure sub-sectors of towers, data centers, and fiber, namely:
- Aqua Comms: owns and operates 12.4k miles (20k kilometers) of trans-Atlantic and regional subsea cables (Read More)
- EMIC-1: 6.2k mile (10k kilometer) subsea cable and terrestrial fiber system, known as Europe Middle-East India Connect 1, in-partnership with a hyperscale customer (Read More)
- Verne Global: data center operator in Iceland which operates a 24-megawatt campus near the town of Keflavik (Read More)
- SeaEdge UK1: data center and landing station for the North Sea Connect subsea cable in Newcastle, England
- TETRA Ireland: exclusive operator of public safety wireless networks across the Republic of Ireland
As a result of these transactions, Digital 9 Infrastructure has now deployed or committed substantially all of its £750m gross equity proceeds raised to-date. Specifically, Digital 9 Infrastructure has raised this capital through its £300m IPO and two placings of ordinary shares for £175m and £275m.
Placing of Ordinary Shares – Digital 9 Infrastructure
As part of today’s announcement, Digital 9 Infrastructure intends to issue a total of 185 million new ordinary shares at a price of 108 pence per share, which equates to gross proceeds of £200m for its stock placing. Upon completion, Digital 9 Infrastructure will have raised £950m in gross equity proceeds since inception.
The firm expects to close the placing on January 26th, with admission of the new ordinary shares onto the London Stock Exchange by January 28th.
Use of Proceeds
Net proceeds from Digital 9 Infrastructure’s ordinary share placing will be used to acquire additional assets from the firm’s pipeline of investment opportunities. Particularly, Digital 9 Infrastructure notes that it has the following pipelines: i) immediate term of ~£325m, ii) near term of ~£500m, and iii) total pipeline of ~£1.8bn.
TETRA Ireland – Wireless Communications Network – Digital 9
Digital 9 Infrastructure, through the entity Digital 9 Wireless Limited, has agreed to acquire a 56% stake in Tetra Ireland Communications Limited (TETRA Ireland) from eircom Limited, an Irish wireless carrier and fixed broadband provider, for total consideration of ~€76m. Specifically, TETRA Ireland is the exclusive and government-mandated operator of public safety wireless networks across the Republic of Ireland.
Additionally, at a future date, Digital 9 Infrastructure has a commitment to increase its ownership up to a 100% holding in TETRA Ireland, based on potential agreements with the company’s other selling shareholders. In turn, this would bring the total consideration up to €135.7m.
Business
TETRA Ireland owns and operates the National Digital Radio Service (NDRS), a wireless network, developed using ‘Terrestrial Trunked Radio’ technology. The company’s network provides 98%+ geographic coverage across the Republic of Ireland, including offshore, mountainous regions, and remote rural locations. Historically, TETRA Ireland has delivered 99.97% network uptime.
As compared to traditional commercial wireless network service, TETRA Ireland’s network provides a greater level of security, resilience, and redundancy. Indeed, these factors are critical for public safety and emergency services.
Customers
TETRA Ireland’s customer base is ~97% comprised by Republic of Ireland Government public bodies, which represent ~70 agencies with 24k active subscribers.
Principally, the company’s network serves emergency services (e.g., police, fire, ambulance), local governments, and public services (e.g., coast guard, prison).
Contracts
TETRA Ireland’s contracts with customers are backed by long-term, inflation-linked cash flows from the Government of the Republic of Ireland.
Verne Global – Data Center Operator – Follow-On Investment – Digital 9
Following Digital 9 Infrastructure’s acquisition of Verne Global, a data center operator in Iceland, the firm has agreed to invest a further $93m into the company. Specifically, over the next 12 months, Digital 9 Infrastructure will fund the expansion of Verne Global by a further 20.7 megawatts of power capacity. Indeed, this implies a cost to build of only $4.5m per megawatt, which benefits from the company already owning the site/land.
Verne Global’s expansion includes the completion of a new 8.2-megawatt data hall and a further 12.5 megawatts of repurposed capacity. Overall, this additional capital expenditure will result in a total constructed capacity at Verne Global’s Keflavik site of ~40 megawatts out of a possible 100 megawatts at this initial site.
In terms of timing, the data hall currently under construction is anticipated to start generating revenue in Q3 2022. Whereas Verne Global’s new development is expected to be completed and start ramping-up in Q1 2023. Notably, both expansions will support enterprise customer demand.
SeaEdge UK1 – Data Center and Cable Landing Station – Digital 9
In December 2021, Digital 9 Infrastructure acquired a data center and subsea cable landing station in Newcastle, England, known as SeaEdge UK1, for a purchase price of £15m. SeaEdge UK1 offers 10.6 megawatts of power capacity and a direct connection to the 275 kV National Grid, which supplies up to 80 megawatts of electrical power.
Digital 9 Infrastructure’s SeaEdge UK1 asset is occupied, and operated, by Stellium Data Centers Limited, a UK data center operator backed by Highbridge Properties. Digital 9 Infrastructure will own the facility, with Stellium operating under a 25-year occupational lease, with 24+ years remaining and upward-only inflation-linked rent reviews.
SeaEdge UK1 hosts several Tier 1 carriers and a notable technology company. Additionally, the facility offers access to the Newcastle Internet Exchange (NCL-IX).
Subsea Cable Landing Station
SeaEdge UK1, through Stellium Data Centers, offers customers trans-Atlantic and intra-Europe connectivity.
This subsea cable landing station is the UK’s landing point for the new North Sea Connect subsea cable, part of the North Atlantic Loop subsea cable network. Notably, this network includes the AEC-1 and AEC-2 subsea cables, both owned and operated by Digital 9 Infrastructure’s portfolio company Aqua Comms.
SeaEdge UK1 is also the landing station for the NO-UK subsea cable, connecting Altibox Carrier’s Norwegian network to the North East of England, and onwards.
