Cordiant Digital Infrastructure plans IPO – Cordiant Digital Infrastructure Limited has announced its intention to launch an initial public offering and to admit its shares on the Specialist Fund Segment of the Main Market of the London Stock Exchange. The company will seek to generate capital growth and a progressive dividend, through investment in the core infrastructure of the digital economy (what it calls the “plumbing of the internet”): data centres, fibreoptic networks and mobile towers in the UK, Europe and North America.
The company is targeting an issue of 300m ordinary shares at an issue price of 100p via an initial placing and an offer for subscription.
1×8 subscription shares
In addition to receiving ordinary shares, subscription shares will be issued for nil value to IPO investors subscribing for ordinary shares on the basis of one subscription share for every eight ordinary shares.
Cordiant Capital Inc. is the investment manager. Cordiant invests in global infrastructure and real assets, running infrastructure private equity and infrastructure private credit strategies through limited partnership funds and managed accounts. Cordiant’s current client base consists of global insurance companies, pension plans and family offices.
- Targeting a NAV total return of at least 9% a year (following full investment of the money raised at IPO and associated borrowings.
- Targeting an initial dividend of 1p per ordinary share in the first full financial year, rising to 2-3p in the second full financial year and, thereafter, a progressive dividend, rising to at least 4p in the fifth full financial year.
- Investment principally in operating digital infrastructure assets, with a predominant focus on data centres, mobile telecommunications/broadcast towers and fibre-optic network assets, primarily located in the UK, the EEA, the United States of America and Canada.
- Pipeline of around €1.5bn, including advanced opportunities in US data centres, Scandinavian fibre and European mobile towers.
The idea is to exploit the growth in data consumption and traffic which is, based on current data traffic patterns and trends (including the adoption of 5G technology), set to provide an economic “tailwind” which the manager believes could last for a decade or more. They say that digital infrastructure assets exhibit a number of attractive investment features, including recurring long-term contracts (often with built in escalator clauses) with predictable cashflows, limited obsolescence risk and location-based barriers to entry.
Members of the manager’s digital infrastructure team have, on average, over 20 years’ experience each in the digital infrastructure, communications technology and Internet sectors and experience with over US$80bn of relevant buy- and sell- side transactions in these sectors over the past 25 years.
Steven Marshall, Cordiant’s chairman of digital infrastructure was president of American Tower Corporation’s (NYSE: AMT) US Tower Division, helping to build the company into a US$100bn digital infrastructure REIT. Mr Marshall previously served as CEO of National Grid Wireless (where he led their wireless tower infrastructure business in the US and UK), whose UK assets were sold to Arqiva, and served as chairman of the Wireless Infrastructure Association.
The focus will be on the middle-market, where they believe that platforms can be acquired at attractive entry prices and the size of the platform grown through capital expenditure and bolt-on acquisitions.
Investec Bank is acting as sole financial adviser, global coordinator and sole broker to the launch.
Shonaid Jemmett-Page, chairman of the company, said: “The need for substantial investment in digital infrastructure in the developed world has been starkly highlighted by our experiences during the global Covid-19 pandemic, whilst the increasing digitisation across societies has the potential to have a transformative impact on the global climate and societal challenges that we face. In Cordiant, the investment trust will have access to a specialist investment manager with industry-leading experience and the ability to take advantage of the substantial opportunities in the sector. I, and my experienced colleagues on the board of directors, are excited about the launch of Cordiant Digital Infrastructure Limited and the potential before us.”
[We have been expecting a launch in this area for a while. It is one part of the infrastructure landscape that hasn’t yet featured much in the sector. The dividend returns will be on the low side when compared with other infrastructure companies, however. The launch is being aimed at the professional investor market. We wish it all the best.]