DigitalBridge Group, through Digital Colony Partners II, its second flagship private equity fund, today announced an agreement to acquire a controlling stake in Vertical Bridge Holdings, LLC, the fourth largest independent tower company in the United States. Specifically, DigitalBridge is acquiring this controlling stake in Vertical Bridge from Goldman Sachs Asset Management’s infrastructure unit, the Jordan Company, as well as Stonepeak Infrastructure Partners, an infrastructure-focused private equity firm.

Notably, DigitalBridge states in its Q2 2021 10-Q that on August 9, 2021, the company “agreed to provide a commitment of up to $650 million in the form of a preferred equity investment to support the acquisition of a digital infrastructure business”, through its investment management platform. Given the timing and scale of this investment, the $650m commitment may be DigitalBridge’s total equity investment into Vertical Bridge.

Finally, the transaction is expected to close during Q4 2021.

Vertical Bridge – Overview

Vertical Bridge owns and master leases 8.0k+ towers across the United States. Including all sites that support wireless network deployments, Vertical Bridge’s portfolio comprises 308k+ owned or master-leased sites, which include tower, rooftop, billboard, utility attachment, and convenience store sites, amongst others.

Operations

For full-year 2021, Vertical Bridge anticipates 6% to 7% organic (i.e., excluding M&A and build-to-suit) growth, net of churn. For example, one driver of Vertical Bridge’s new leasing activity is helping DISH Network deploy their C-RAN network architecture. Additionally, wireless carriers Verizon, T-Mobile, and AT&T are driving amendment activity.

During 2021, Vertical Bridge expects to build 360+ tower sites.

Strategy

Under DigitalBridge’s ownership, Vertical Bridge will capitalize on tower market growth opportunities driven by enhanced data consumption, infrastructure investment for 5G networks, and will support Internet of Things (IoT) applications.

Competitors

Vertical Bridge’s U.S. tower count of 8.0k+ positions it as the fourth largest independent tower company in the United States. Indeed, in the U.S., the company competes with the domestic infrastructure of American Tower (42.8k sites), Crown Castle (40.1k sites), and SBA Communications (17.3k sites).

Ownership

Beyond DigitalBridge’s “controlling stake” purchase from Goldman’s Jordan and Stonepeak, a number of important shareholders were not part of today’s announcement, as selling their interests in Vertical Bridge. Therefore, these shareholders may maintain their ownership in the company upon completion of the transaction.

Firstly, Caisse de dépôt et placement du Québec (CDPQ) owns a 30% stake in Vertical Bridge. Secondly, CalSTRS, the Edgewater Funds, and Dock Square Capital may also continue owning an interest in Vertical Bridge. Finally, DigitalBridge’s similarly-named legacy vehicle, known as Digital Bridge Holdings, has also been a shareholder in Vertical Bridge, since 2014.

Transaction Advisors – Vertical Bridge and DigitalBridge

Vertical Bridge’s financial advisor was Goldman Sachs. Additionally, Vertical Bridge’s legal advisor was Greenberg Traurig.

DigitalBridge’s financial advisor was J.P. Morgan. Additionally, DigitalBridge’s legal advisor was Vinson & Elkins.

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