International Public Partnerships (INPP), the £2.5bn infrastructure fund, has written off most of its £24.1m investment in toob, the UK full-fibre broadband provider it backed at launch in 2019.

INPP highlighted in June the challenges facing the UK’s altnet market and the “overbuild risk and consolidation pressure” on smaller operators like toob. It was one of four UK companies in which it committed to invest £45m through the National Digital Infrastructure Fund in 2017.

With INPP manager Amber Infrastructure as a majority shareholder, toob built its own network across Southampton and other parts of South England, providing broadband to around 300,000 premises and 140,000 customers.

However, in the wake of the Middle East conflict this year toob had “experienced pressure on both customer growth and margins” with INPP delaying the release of the remaining half of its additional £8.8m investment while it assessed the company’s financial position.

This morning it said: “Following extensive discussions, the company has elected not to commit further capital to toob and subject to final terms, will transfer its equity interest to the debt holders for a de minimis amount (from £24.1m or c0.9% of NAV [net asset value] at 31 December 2025).”

INPP, which in 2021 invested £14.2m in toob and committed to invest a further £13m, will retain £2.6m of senior debt, entitling it to a share of proceeds from any sale of the business, which is now in the control of Ares Management, provider of a £300m debt line three years ago.

The investment company said its other digital infrastructure investment in Community Fibre, which accounts for 1% of the portfolio of 130 assets, continued to perform in line with expectations. The two previous investments through NDIF were NextGenAccess and Airband. It sold these in 2022 and 2023, generating double-digit returns and “significant shareholder value”.

INPP said its guidance for NAV per share at 30 June was unchanged and expected to be broadly in line or marginally higher than its 151.5p level at 31 December. The shares eased 0.4% to 139p, a 7% discount to analysts’ estimates of 150.5p NAV.

The company, which invests broadly across transport, energy transmission, waste water, gas distribution and education, has participated in the infrastructure company sector revival in the past year with the 6% dividend yielder returning 23% over 12 months. Over five years, its total shareholder return of 12.4% has lagged the 15.7% sector average.

Our view

James Carthew, head of investment company research at QuotedData, said: “At first glance, this looks like a similar situation to 3IN’s write down of DNS:NET earlier this year; another fibre business struggling against strong competition and possible, as in DNS:NET’s case higher financing costs. However, toob was a relatively small investment for INPP and it is encouraging that it will not have much of an impact on NAV, highlighting the benefits of diversification.”