Superconsortium forms for Arqiva

02 October 2017 - 12:00 am UTC

The funds remaining in the race for UK telecoms infrastructure business Arqiva have joined forces, narrowing bidders down to a single consortium.

Inframation understands that Brookfield is now in a consortium with fellow Canadian PSP Investments and US-based Digital Bridge.

GIC has pulled out of the race, sources said, while Arcus is still looking at the sale.

Arqiva’s shareholders, Macquarie European Infrastructure Fund (MEIF) II (25%) and Canada Pension Plan (48%), IFM Investors and MTAA Superannuation Fund, are still considering both the trade sale and an IPO, sources said.

Rothschild and Bank of America Merrill Lynch are the financial advisers.

The main obstacle to the trade sale is a bidder and shareholders valuation gap, which is thought to be significant, sources said.

With just one bidder remaining, the IPO option maintains the competitive dynamic of the sale process, meaning it is unlikely to collapse, a banking source said.

However, an IPO would not provide the full exit some shareholders are seeking, sources said. Macquarie-managed MEIF II is a ten-year fund launched in 2006, which has twice been extended by one year.

Barclays, Goldman Sachs, HSBC and JP Morgan are also preparing an IPO of Arqiva.

The IPO could take place before the end of the year, Inframation understands. All options are still open and the choice will depend on the market response.

If the IPO is unsuccessful, the shareholders could return to the trade sale, sources said.

A comparable deal could be French telecoms and broadcasting tower business TDF, which took nearly two years to sell, in a process that reportedly included an attempted IPO worth up to EUR 8.5bn. In that deal, buyers Brookfield (50%), Arcus Infrastructure Partners, APG and PSP Investments paid EUR 3.56bn in debt upon financial close in April 2015.

Sellers Ardian, TPG, Charterhouse and French state-owned investment company Bpifrance sold 100% of TDF’s French unit in order to repay EUR 3.5bn of debt liabilities that were due to mature in 2016. An IM issued in July 2013 had valued the company at EUR 3bn to EUR 4bn.

In another recent sector deal, Spanish telecoms incumbent Telefónica pursued a dual track sale of tower and undersea cable business Telxius. Eventually, it agreed to sell a 40% stake to KKR in a two-part transaction worth EUR 1.275bn.

Arqiva, Arcus, and Digital Bridge declined to comment. Brookfield did not respond by the press deadline, while PSP declined comment.