2019 M&A Review: Infrastructure Funds and then Everyone Else

December 24th, 2019 by · 1 Comment

As I do every year, I have been looking back on the M&A in the infrastructure space in search of patterns to make sense of: what assets are hot, where they are, etc.  But this year it’s clear that the theme is more about who, as this year the infrastructure funds and longer-term, infrastructure-focused private equity groups have really taken charge.  Hence, it makes sense to group much of this year’s M&A activity by the financial family to which they belong.  So let’s take a quick survey of 2019’s M&A activity starting from that standpoint:

One of the biggest fiber deals of the year was the buyout of Zayo by EQT and Digital Colony. After months of rumored bids and talks, the two funds did a deal that will take Zayo private once again. But both have also been busy consolidating independently.

Digital Colony also bought Peer 1 from Cogeco back in February and followed it up recently by acquiring Beanfield. But then Colony Capital bought out its partner in Digital Colony, Digital Bridge, in a deal that brings the activities of both under the same roof. Digital Bridge’s portfolio company DataBank, for instance bought a data center out in Pittsburgh from PNC Bank.

For its part, EQT has been busy building a platform out of their fiber assets in Europe. They are merging their portfolio companies IP-Only and GlobalConnect into a unified Scandinavian entity, and they also bought Inexio just to the south in Germany.

Macquarie  and the various funds it manages have been busy on multiple fronts this year. They started off the year by pulling off a complicated transaction in which they acquired Bluebird Network and combined it with Uniti Group’s Midwestern assets while unloading all the actual fiber of both back to Uniti in a sale/leaseback transaction. Then a few months ago Bluebird followed up by purchasing the Illinois Network Alliance, whose assets they were already managing. Meanwhile, over in the UK, Macquarie bid for and won KCom, taking over the northern England-based service provider in August, and also invested in the fixed wireless provider Voneus. And also down in Spain they bought an FTTH network from MasMovil alongside Aberdeen Standard Investments.

Antin Infrastructure Partners has been looking at the possibility of selling Eurofiber over in the Netherlands, but Eurofiber nevertheless went out and acquired its way into northern France recently.  Meanwhile, Antin’s portfolio company FirstLight has been actively yet quietly rolling up yet more assets in New England all year. In the spring they bought Maine Fiber Company, in the summer they folded in Todd Cable Construction, and so far this winter they have acquired ColoSpace.  None of those deals are particularly huge, but it’s fascinating how many consolidation targets FirstLight has managed to locate and execute on in the upper northeast over the years.

AMP Capital has added to its infrastructure portfolio with the acquisition of the cloud and data center provider Expedient. Meanwhile, its portfolio company Everstream has been making M&A moves even as it pours money into an organic expansion across the Midwest. In April they bought Arch Fiber Networks out in St. Louis, and in October they bought the former LightBound fiber assets in Indianapolis from DataBank.

Grain Management has made a series of moves this year. They have purchased Summit Broadband and Hunter Communications as well as a majority stake in Ritter Communications. Meanwhile, their portfolio company Great Plains Communications bought InterCarrier Networks.

SDC Capital Partners made a pair of deals this year in the fiber space. They took a majority stake in both SummitIG, which has built new regional and metro fiber down in Virginia, and also in the fiber construction and engineering specialist Tilson.

Stonepeak’s euNetworks expanded its metro reach into Vienna with the purchase of Onstage Online GmbH.  Novacap TMT’s portfolio company Horizon acquired its way beyond Ohio and into Indiana with the purchase of 1000 route miles of fiber and conduit in Indianapolis.  CINVEN’s Ufinet bought its way into Brazil with the acquisition of Netell.  And iCON Infrastructure made a move in the southeastern US, buying TruVista.

A few other network service providers have had interesting years as well. Down south, Hargray made a pair of deals to purchase the Alabama assets of USA Communications and the Jacksonville metro fiber provider Dark Fiber Systems. TPx made a move to go public via a deal with Pensare, but when that fell through they wound up accepting an offer from Siris.  And the low latency specialist BSO acquired IX Reach.

A few privately held data center players made interesting moves.  ServerFarm acquired 5NINES Global Holdings, expanding its global footprint further.  Element Critical bought two significant data centers out in Chicago, a new market for them.  And Netherlands-based TDCG bought a couple of facilities from NovoServe.  365 Data Centers bought a facility in New Jersey from NYI, and then NYI turned around and bought one out in Chicago, thus diversifying its geographical footprint.

The public infrastructure companies have done a few things themselves.  Digital Realty, in particular, made a couple of big moves.  They recently announced plans to purchase Interxion over in Europe, a major deal in the colo space.  But they also sold off a few assets to MapleTree, streamlining their portfolio.  And for its part, Equinix bought Switch’s AMS 1 facility in the Netherlands as well as a set of data centers in Mexico from Axtel.  GTT picked up the assets of KPN International, even as it considers selling off the fiber side of things after a difficult year.

There were some technology acquisitions by major providers, as always.  Orange acquired SecureData and also SecureLink to boost its cybersecurity portfolio.   Verizon did something along similar lines with the acquisition of ProtectWise, as did Comcast with the purchase of BluVector.  Meanwhile, CenturyLink acquired Steamroot to further advance its OTT video delivery capabilities.

A few large service providers this year did some divesting and other rearrangement of assets. Windstream kicked off the year by selling its EarthLink consumer business to Trive Capital. And Charter Communications did something similar, selling its Navisite managed services division to RDX.  Frontier downsized itself, selling its operations in the Pacific Northwest and northern Rockies to WaveDivision Capital and Searchlight Partners.   Telefonica sold off another collection of Central American assets to Millicom.  And Vodafone sold off its New Zealand subsidiary to Infratil and Brookfield Asset Management.

And somewhere in the background of all this is the limbo that holds T-Mobile US and Sprint, whose potential deal is currently with the courts after getting federal approval but failing to convince a group of state regulators.  Hard to say what will happen there, but maybe I’ll make a prediction anyway next week when I make my 2020 forecasts.

I’m sure I have missed a few deals that should have been mentioned.  Feel free to chime in via the comment section below, and I’ll update the article with anything that needs to be there.


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Categories: Datacenter · Fiber Networks · Mergers and Acquisitions

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1 Comment, Add Yours!

  • yomdoo says:

    Rebuild the fiber plant with optical fiber that cannot be physically tapped, can be re-purposed dynamically for bandwidth or security.
    The cost of an invulnerable fiber is a ’rounding error’ compared to the cost of massive data ciphering, exfiltration by hackers placing undetectable physical taps on fiber.

    If you get what you pay for, the glass fiber in the ground IS part of the security problem but could be secured with new fiber available from the major fiber makers in U.S., Europe, Japan and even China but there is no pressure to secure this large, enterprise scale network vulnerability. An unsecured liability too big to address!? Or, too obscure to become a pain point?

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