Triple Point, an investment manager focused on social housing, energy, vehicle leasing, and venture capital, today announced its intention to raise £400m through the initial public offering (IPO) of a newly created fund called Digital 9 Infrastructure. Currently, Triple Point has over £1.8bn of private, institutional, and public capital.
Digital 9 Infrastructure is launching its initial public offering (IPO) on the London Stock Exchange, after releasing its Intention to Float. Specifically, the new vehicle will invest in what Triple Point deems the “backbone of the internet”, which includes towers, data centers, fiber (including subsea cables), and small cells in the UK, European Union, and United States.
Digital 9 Infrastructure is targeting a capital raise of £400m, through the issuance of 400 million shares at a price of 100 pence per share. Indeed, Digital 9 Infrastructure expects to publish an IPO prospectus in March 2021 and complete the IPO shortly afterwards.
Akur Capital, is acting exclusively as financial adviser for Digital 9 Infrastructure. Additionally, Triple Point has chosen J.P. Morgan to act as Global Coordinator and Sole Bookrunner on Digital 9 Infrastructure’s IPO.
Digital Infrastructure – Market Opportunity
Digital 9 Infrastructure and Triple Point note that a significant opportunity exists in the digital infrastructure sector. Indeed, the demand for data continues to grow exponentially and touches all aspects of our connected world. Specifically, digital infrastructure supports the way we shop, work, and socialize, which is increasingly data driven.
Digital infrastructure refers to the critical infrastructure required for the internet to operate. Specifically, digital infrastructure comprises:
- Towers and Small Cells: carry data traffic wirelessly to the end user
- Data Centers: organizations that house critical networks of computer and storage resources
- Fiber: networks that connect continents, businesses, and homes
Any business that is online, including some of the largest and most successful global companies, increasingly requires the internet and data usage & transfer to function.
Key Growth Drivers of Digital Infrastructure
Since 2010, the number of internet users worldwide has doubled, while global internet traffic has grown 12x, equivalent to growth of ~30% per year. Furthermore, global internet traffic is expected to double again by 2022. Indeed, these trends are being propelled by the amount of data produced and consumed, which is expected to quadruple by 2025.
Additionally, the number of mobile internet users is projected to increase from 3.8 billion in 2019 to 5 billion by 2025. Finally, the demand for terrestrial and subsea bandwidth is growing rapidly, and by 2026, 4 Petabits of new capacity will need to be installed (i.e., 25%. of total demand).
Investment Profile and Strategy – Digital 9 Infrastructure
Digital 9 Infrastructure will invest in businesses and assets with medium- to long-term contracted revenues, underpinned by high quality counterparties. Overall, the fund is targeting a 10% annual net total accounting return. The 10% annual return is comprised of an assumed 4% portfolio appreciation per year and an initial 6% dividend yield annually on the IPO issue price.
Aqua Comms – Seed Investment
Digital 9 Infrastructure will use up to 40% of IPO proceeds to acquire, shortly after the IPO, Aqua Comms, a subsea cable operator, at an enterprise value of £160m ($215m). Specifically, Aqua Comms owns and operates 12.5k miles of trans-Atlantic subsea cables and is the only independent owner and operator of subsea cables in the North Atlantic. Notably, Aqua Comms’ current owners are U.S. private equity firm Cartesian Capital.
Aqua Comms has a customer base, with a broad range of global content providers. Indeed, these customers include Facebook, Amazon, Apple, Netflix, Google, and Microsoft, which collectively represent 50% of the company’s revenue. Additionally, telecom service providers such as Vodafone and Orange SA are also customers of Aqua Comms. Notably, these customers have long-term contracted revenues with Aqua Comms, in the form of leases or Indefeasible Rights of Use (IRUs).
Overall, Triple Point has assembled an investment pipeline with over $3bn in digital infrastructure opportunities, of which $1bn will be investable during the 12 months following completion of the IPO. Moreover, Triple Point has identified specific short-term targets with investable value in excess of £200m ($275m), including:
- UK wireless infrastructure business, with a specific focus on 5G
- Portfolio of United States, UK, and northern European data centers
- UK terrestrial fiber platform
Digital 9 Infrastructure will invest in two particular groupings of digital infrastructure, in order to further diversify its portfolio. Specifically, Digital 9 Infrastructure groups digital infrastructure into distinct categories, for the purposes of:
- Data Transfer: wireless tower networks, terrestrial fiber, and subsea cables
- Data Storage: data centers
Digital 9 Infrastructure will focus, primarily, on digital infrastructure investments where the assets are operational and, there is a contract in-place with the end user. However, Digital 9 Infrastructure will also provide limited funding during the construction or development phase of a digital infrastructure asset. In particular, on a forward funding basis. which limits development risk for Digital 9 Infrastructure.
Triple Point – Investment Manager Overview
The Triple Point Group currently manages over £1.8bn of private, institutional, and public capital. Overall, Triple Point has experience in infrastructure investment, asset & project finance, portfolio management, and structured investments. Indeed, this investment experience extends to various asset classes including digital, renewable energy, energy efficiency, social infrastructure, and lending & leasing into public and private bodies.
Triple Point’s Digital Infrastructure team is led by Thor Johnsen and has experience in the development and management of digital infrastructure assets. Specifically, the team has invested $1.9bn of capital in infrastructure and have managed Aqua Comms for six years.
Management Fees, No Performance Fees
Triple Point will receive a stepped annual management fee, on the following basis, for managing the Digital 9 Infrastructure fund, post-IPO:
- 1.0% of Net Asset Value (NAV) up to £500m
- 0.9% of Net Asset Value (NAV) between £500m to £1bn
- 0.8% of Net Asset Value (NAV) on £1bn+
- No performance fees or any other fees will accrue on an ongoing basis
Triple Point – Digital Infrastructure Investment Team
Triple Point’s digital infrastructure team has an investment track record of $1.9bn in infrastructure investments, with realized investments yielding an IRR of 42%. Key individuals from Triple Point who are responsible for executing Digital 9 Infrastructure’s investment strategy, post-IPO, are:
Thor Johnsen – Head of Digital Infrastructure
Thor Johnsen has over 15 years’ experience in infrastructure investment, specializing in digital infrastructure. Johnsen has been responsible for a digital infrastructure portfolio including subsea cables development and management, mobile networks, and data centers. Indeed, this includes Aqua Comms, the initial asset, for six years. Over his career, Johnsen has invested and managed $1.9bn of infrastructure investments and served as Head of Infrastructure (Asset Based) for Arcapita Bank across Europe. Johnsen was also previously at Bank of America and Credit Suisse.
Andre Karihaloo has over 15 years’ experience in financial services. Karihaloo began his career in investment management at HSBC in New York and London. He has worked on over £5bn of infrastructure development transactions. Additionally, Karihaloo has appeared before three Select Committees in Parliament and the Prime Minister to discuss infrastructure. Overall, he has advised on £1bn in digital infrastructure deals.
Arnaud Jaguin has over 15 years’ experience in telecoms and digital infrastructure. Jaguin began his career in telecoms M&A at UBS in London, advising on £50bn of transactions. At Level 3 Communications and RETN, Jaguin worked on corporate development, corporate strategy, segmentation, and sales operations.
Triple Point – Digital Infrastructure Industry Experts
The Triple Point team will be supported by a panel of digital infrastructure industry experts. Indeed, these industry experts have knowledge, relationships, and involvement in a combined $250bn of digital infrastructure transactions. Key industry specialists adding resources to Triple Point are:
Alan Harper spent 12 years at Vodafone Group including as Group Strategy Director. Harper was involved in over $200bn of global acquisitions completed by Vodafone. He co-founded Eaton Towers in 2008 and was CEO until 2015. Indeed, Eaton Towers was a leading telecom tower company, which was acquired by American Tower for $1.85bn in 2019.
Ed McCormack has over 40 years’ experience in global business, including 25 years in telecommunications. McCormack spent eight years as an Executive Director and Officer at FLAG Telecom. At FLAG, he built a global network services portfolio and 32k miles of subsea cables connecting key markets globally. In addition, McCormack served four years as Non-executive Director of Global Crossing (UK), a UK voice, enterprise, and communications business. Additionally, McCormack serves as a Senior International Advisor to Ciena.
Steve Andrews has 25 years of experience as an Executive at BT Plc. Andrews held various roles including President of Global Carrier business, MD Products and Services and Retail Strategy. He managed BT’s Network Operations across 125 countries, including subsea cables. Andrews was also Chairman of private-equity backed Azzurri Communications, until a successful exit in 2016.
Jack Waters will be Chairman of the Board for Digital 9 Infrastructure. Waters was formerly President of Zayo Networks and Chief Operating Officer at Zayo Group. Indeed, Zayo was a public company prior to its $14.3bn take private, which completed in 2020. During his tenure, Zayo owned 130k fiber route miles and 45 data centers in the U.S. and Europe. Prior to joining Zayo, Waters was Chief Technology Officer and one of the founding senior executives at Level 3 Communications.