LONDON, UK: Digital 9 Infrastructure plc has agreed the terms of an acquisition of a 48.02% voting stake in Arqiva Group Limited, a statement said.
The completion of the acquisition is subject to customary regulatory approvals. The acquisition will be funded through a combination of £300.0 million in cash and a vendor loan note.
The stake is being acquired from Canada Pension Plan Investment Board (CPP Investments). CPP Investments first acquired a stake in Arqiva in 2009. The remaining shares in Arqiva are held by its existing shareholders.
Arqiva Group is a UK-based data, network and communications service provider, the sole operator of digital terrestrial television and radio infrastructure in the United Kingdom and an Internet of Things (“IoT”) connectivity platform for utilities, including a smart water metering platform working at scale in the UK.
The acquisition has been funded through a combination of £300.0 million in cash and a £159.3 million non-recourse vendor loan note.
The DGI9 Equity component will be funded through the Group’s existing cash resources including its Revolving Credit Facility. The valuation for the acquisition has been based on the financial results of Arqiva as at 30 June 2021, being the latest audited accounts. At that date, the business reported a total EBITDA of £332.4 million and £1,878.3 million of net external debt.
Arqiva provides the Company with a unique opportunity to benefit from:
· Further portfolio diversification across the digital infrastructure asset classes in which the Company invests.
· Significant and highly visible Sterling-denominated cash flow generation, part of which is regulated by Ofcom.
· A weighted average contract length of c.8 years4 with inflation protection against 69% of the revenues Arqiva generates.
· Long-established customer relationships, and a high quality, blue-chip customer base including the BBC, ITV, Discovery, BT Sport, and Sky.
· Attractive and growing national IoT platform providing connectivity for utilities, connecting over 15 million business and consumer premises.
Following the investment in Arqiva, the Company has built a c.43% pro forma exposure to wireless networks, complementing its c.39% exposure to data centres and c.18% to subsea fibreoptic networks.
Phil Jordan, Chair of Digital 9 Infrastructure plc, commented: “We believe the safe and reliable access to data and content across multiple devices and the closer connectivity between broadcasters, utilities and their customers will contribute to the UK’s sustainable economic development. Arqiva is a long-standing trusted communications infrastructure operator in the UK and complements our investment mandate to build resilient infrastructure, promote inclusive and sustainable industrialisation, and foster innovation. Arqiva expands the Company’s exposure to wireless networks and will support the Company’s total return and yield targets as we continue to build a high-quality portfolio of scalable platforms and technologies.”
Thor Johnsen, Head of Digital Infrastructure at Triple Point Investment Management LLP, commented: “The core, contracted nature of Arqiva’s national broadcasting service is complemented by its high growth and innovative smart metering and connectivity solutions. The business benefits from the utility sector’s need to manage data more effectively across networks, whilst it continues to maintain long-term cash flow from its national broadcasting service.”
Further to the Company’s announcement on 27 June 2022, Digital 9 Infrastructure plc has completed the acquisition of a 51.76% economic stake in Arqiva Group Limited, a UK-based data, network, and communications service provider, company said on October 19, 2022..