UK last mile fibre company seeking equity injection

01 July 2019 - 12:00 am UTC

UK ‘last mile’ fibre broadband provider Grain is considering the sale of a stake to provide more funds for expansion, sources said, a process that could attract infrastructure funds.


Grain’s owners Pinnacle Group, a provider of property services such as regeneration and housing management, and Solway Communications, which provides broadband in Cumbria, northwest England, have appointed merchant bank Cameron Barney to advise on a potential sale, the sources said, adding that the process is in its early stages. 


Grain declined to comment. Pinnacle, Solway and Cameron Barney did not immediately respond to a request for comment. 


Pinnacle and Solway formed Grain in 2016 to provide fibre for new residential and other developments across the UK. 


Recent projects Grain has undertaken include a project to connect 3,000 new homes in Countesswells, a new town near Aberdeen. The project, which is connected to Grain’s data centre in Manchester, will result in the homes having download speeds of 1 gigabyte per second, 35 times faster than the UK average, Grain said.


Grain’s competitors in the last mile fibre sector include Fibrenest, which is owned by the housebuilder Persimmon and supplies new Persimmon homes, as well as established telecom companies such as BT.


An investment in Grain is likely to be of interest to infrastructure funds, which have increasingly been targeting fibre providers, people following the process said. More particularly, providers of last mile utility services that do not yet have capabilities in fibre could be interested in Grain.


Infrastructure funds with existing investments in last mile telecoms include Brookfield Infrastructure and PGGM, whose BUUK infrastructure owns GTC, a provider of electricity, gas and water connections as well as fibre connections, and Alinda and Hermes, which together own Energy Assets Group.


Other infrastructure investors have last mile utilities investments but have not added fibre to their mix so far. These include Ancala, whose LEEP Utilities joint venture with Peel Group provides electricity, gas and water connections and Arjun’s Indigo Pipelines, which provides gas connections. Ancala plans to enter the fibre sector, as reported. 


Infrastructure funds have also increasingly been targeting UK fibre companies. Recent transactions include Amber Infrastructure-managed National Digital Infrastructure Fund (NDIF) earlier this year buying a stake in Portsmouth-focused broadband provider toob and Cube Infrastructure Managers’ acquisition last year of a minority stake in London-focused broadband operator G.Networks.


G.Networks and Grain have the same chairman, BT’s former chief strategy officer Sean Williams. 


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