Vantage Towers today announced the final price for its initial public offering (IPO) at €24.00 per Vantage Towers share, with shares now trading on the Frankfurt Stock Exchange under the symbol VTWR. Overall, Vodafone Group, the sole seller in this IPO, has placed 95.8m shares, including 12.5m shares to cover over-allotments, resulting in gross proceeds to Vodafone of €2.3bn (assuming full exercise of the greenshoe). Indeed, a cornerstone investor purchasing shares in Vantage Towers is Digital Colony, backed by Colony Capital, which we discuss below.

The shares sold through the initial public offering (IPO) represent an 18.9% ownership interest in Vantage Towers. Additionally, at the offering price of €24.00 per share, Vantage Towers’ initial public market capitalization represents €12.1bn.

Vantage Towers – Cornerstone Initial Public Offering Investors

As previously discussed, the Vantage Towers IPO involves private placements to two institutional shareholders. Notably, these are Digital Colony Partners II, the flagship private equity fund managed by Colony Capital and RRJ Capital. Colony Capital recently provided an update on its rationale for investing €500m in the Vantage Towers initial public offering (IPO):

Vodafone Anchor Tenant

Colony Capital is a firm believer that the basis of tower investing is on credit quality. Therefore, Vantage Towers, with Vodafone Group as its anchor tenant, offers strong credit quality through a long-term master services agreement (MSA). Specifically, this MSA has an 8+8+8+8-year contract term. Notably, Colony Capital describes Vodafone Group as one of the great credit stories in Europe.

Firstly, Vantage Towers has investment grade credit ratings, with ratings of BBB- (stable) from S&P and Baa3 (strong) from Moody’s. Secondly, Vodafone Group, as anchor tenant, has long-term credit ratings of BBB (stable) from S&P and Baa2 (negative) from Moody’s. Finally, Vodafone Group will use the net proceeds from the Vantage Towers initial public offering (IPO) to pay down debt. In turn, this debt paydown will enhance Vodafone Group’s credit profile going forward.

Vodafone and Colony Capital Partnership

For Colony Capital, Vodafone Group is a known quantity and strong customer across its different digital infrastructure portfolio companies. For example, FreshWave Group, is a portfolio company of Digital Colony Partners I, that builds and operates wireless infrastructure in the UK. Specifically, FreshWave Group operates 5k small cell nodes, 5k towers, and 150 networks in the UK. Indeed, FreshWave Group holds Vodafone as one of its key customers.

Overall, FreshWave Group is performing a significant amount of work with Vodafone to build-out its small cell infrastructure. In turn, through FreshWave Group, and other touch points, Colony Capital has become familiar with Vodafone and Vantage Towers’ senior leadership team over the past years. In summary, for Digital Colony, the Vantage Towers initial public offering (IPO) is a unique way to invest capital in the European towers sector with a customer it knows and trusts.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


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