EQT to pay high teen multiple for Inexio

30 September 2019 - 12:00 am UTC

EQT Infrastructure has agreed to buy a majority stake in Inexio for a “high teens” multiple, in a deal which will see the fund manager secure its fifth European fibre-optic broadband business.

 

The Swedish fund manager said in a statement on Saturday (28 September) that it has agreed to acquire a majority stake in Inexio from private equity firms Warburg Pincus and Deutsche Beteiligungs and several undisclosed minority investors.

 

The size of the stake has not been disclosed although it is in excess of 75%. All shares are being sold except for a “small stake in the double digits” owned by the business’ management, including its founder and CEO David Zimmer.

 

A source close to the manager said that the deal valued the entire business’ enterprise value at around EUR 1bn, adding that the company reported EBITDA for 2018 of EUR 50-55m.

 

EQT Infrastructure’s fourth fund is acquiring the stake in Inexio, which provides fibre-optic broadband to 300,000 households and 6,000 businesses through 10,000km of networks, according to the statement.

 

The manager is looking to raise debt from banks, the majority of which will be used to fund Inexio’s rollout of fibre-optic broadband across rural parts of Germany, said a source close. Financial close is due to take place next month.

 

The Stockholm-listed fund manager already has an extensive footprint in the European fibre-optic broadband market, with around 1.3 million households and businesses connected to 75,000km of networks operated by four businesses it owns. 

 

EQT’s third infrastructure fund owns Danish business GlobalConnect, which operates a 42,000km fibre-optic broadband network covering Denmark and parts of northern Germany, including Berlin, Hamburg and Hannover. 

 

The third fund also owns DeltaFiber, which operates a 6,000km hybrid fibre network – which combines fibre and coaxial cables – for 600,000 households and businesses in the Netherlands. 

 

EQT’s fourth infrastructure fund owns Melita, which operates a 1,600km hybrid fibre network connecting 200,000 households in Malta, and in July the same fund acquired Swedish broadband business IP-Only, which owns a 16,000km network connecting 200,000 households and 3,000 businesses, from an EQT private equity fund for 18 times its 2018 EBITDA.

 

EQT acquired Inexio as it wants a “platform” in Germany’s growing fibre-optic broadband market, according to the source close to the manager.

 

Saarlouis-headquartered Inexio is contracted to provide fibre-optic broadband to two million rural and suburban households by 2030, according to the press release. 

 

Germany’s government wants 10 million households in rural areas to be connected to fibre-optic broadband by 2030. 

 

EQT is also expected to bid for KKR Infrastructure’s Deutsche Glasfaser, which provides fibre-optic broadband networks to around 200,000 customers in rural areas across Germany.

 

Warburg Pincus holds a 59.45% stake and Deutsche Beteiligungs a 16.4% stake in Inexio, with the remaining 24.15% owned by undisclosed investors and the business’ management.

 

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