Cordiant Digital Infrastructure (CORD) has, in partnership with TINC NV (TINC) and another Cordiant-managed fund, agreed to acquire and combine Belgian data centre provider DCU Invest NV (Datacenter United, or DCU), and the data centre business of Proximus Group (the PDC Business). CORD and the other Cordiant-managed fund will acquire a 47.5% economic interest in the combined group for a total equity consideration of €92.3m. The acquisition of the combined group is subject to regulatory approvals and is expected to close early Q1 2025. CORD will acquire its portion of the combined group using proceeds of the eurobond facilities put in place in June 2024.
Who is DCU Invest?
CORD says that DCU is a Tier III/IV data centre operator with 9 data centres across 8 locations in Belgium. CORD and the other Cordiant-managed fund have agreed to acquire the investment in DCU via a mix of new primary equity and secondary share acquisitions from TINC, the Belgian infrastructure investor, and DCU’s chief executive officer, Friso Haringsma, at an enterprise value of €72.5m. Following completion of the DCU Transaction, TINC will continue to hold 47.5% of the share capital of DCU and Mr Haringsma 5.0% (non-voting). The new primary equity will provide funding for DCU’s acquisition of the PDC business.
Who is Proximus Group?
The PDC business consists of 4 data centres across 3 locations in Belgium. DCU has agreed to acquire the PDC business from Proximus Group, the incumbent Belgian telecommunications provider, for an enterprise value of €128m. Prior to closing, the PDC business will be transferred to a newly formed company and DCU will acquire the entire share capital of this entity. Mr Haringsma will become the CEO of the combined group and Steven Marshall, chairman of Cordiant Digital, will become chairman of the board of directors.
What does the combined group look like?
CORD says that the combined group, on a pro forma basis, has 13MW of IT power, generated revenues of c.€40.3m and had EBITDA of €15.1m in 2023. It adds that closing leverage is expected to be modest, with outstanding gross debt of c.€10.5m as at 31 December 2023. Cord highlights that the combined group has a capacity expansion potential of an additional 11.1MW, most of which could be built across the existing 11 locations.
As part of the transaction, Proximus has agreed a long-term inflation-linked master services agreement (MSA) with the combined group, for 10 years with two 5-year option periods, as well as certain other ancillary agreements which will govern the overall commercial relationship between the parties. Upon completion of the transaction, Proximus, as a direct customer, will use 37% of the combined group’s IT power capacity. CORD says that other customers across the combined group include a mix of blue-chip corporates and government bodies, resulting in overall current capacity utilisation of c.80%.
CORD says that its investment manager will contribute its expertise in data centres to help drive the performance of the combined group, which will benefit from economies of scale and cost synergies. These acquisitions will further expand the company’s EU data centre portfolio, and the investment manager sees opportunities for the acquired data centres to benefit from the company’s wider network of data centre assets, for example, those existing customers who may require a second or back-up site in the EU.
Co-investment reduces CORD’s exposure
Cordiant has reached agreement in principle for a separately managed fund to invest €20m alongside it in the transaction, which would reduce CORD’s indirect shareholding in the combined group to 37.2%. This co-investment remains subject to agreement between the parties of definitive documentation.
CORD’s gearing level
The company’s net gearing ratio was 38.4% as at 30 June 2024. On a pro forma basis, following the investment by the company in the combined group, the company’s net gearing ratio would be 42.1%. On the same pro forma basis, the aggregate annual EBITDA of the company’s portfolio, including the company-level costs, and its share of the combined group would be £138.7m
CORD’s total available liquidity disclosed as at 30 June 2024, pro forma for this acquisition and assuming CORD subscribes to the full €92.3m equity consideration, is £257.5m.
