Investment trust 3i Infrastructure plc said it agreed to sell its 93% stake in Edinburgh-based Wireless Infrastructure Group (WIG) to Brookfield Infrastructure.
“The sale values the company’s stake in WIG at approximately £387 million, compared to a valuation of £291 million at 30 September 2019,” said the £2.6 billion closed-end fund.
“This equates to an enterprise value for WIG of £575 million, and will result in a 27% gross IRR and a 1.7x gross money multiple for 3i Infrastructure.
“Completion of the transaction is expected to follow very shortly, with approximately half of the proceeds payable immediately, a quarter payable unconditionally in 12 months and a quarter payable unconditionally in 24 months.”
3i Infrastructure invested £75 million to acquire a minority interest in WIG in April 2016 to support the growth of the business.
In January 2018, 3i Infrastructure invested a further £187 million to increase its equity ownership to 93%.
WIG — headquartered in Edinburgh headquartered with key offices in Bellshill, Solihull and London — builds and operates communications towers in rural and suburban areas, together with neutral host networks to enable mobile coverage in buildings and on city streets.
Its recent projects include the deployment of neutral host infrastructure in venues including Liverpool’s Anfield Stadium, Lord’s Cricket Ground and the King’s Cross development in London.
3i Infrastructure chair Richard Laing said: “This transaction delivers exceptional value to shareholders, well above our investment case back in 2016.
“Whilst 3i Infrastructure aims to hold its investments over the longer term, we will sell investments where this generates significant additional value for shareholders.
“This has been an excellent investment for the Company, despite the relatively short holding period.”
Phil White, managing partner and head of infrastructure, 3i Investments plc, said: “This sale arises unexpectedly but in the context of a changing competitive landscape in the UK mobile towers sector where scale is increasing in importance, with a number of potential tower portfolio transactions anticipated to take place next year.
“In the process of preparing to position WIG for such a transaction, we received a compelling offer from Brookfield Infrastructure which, after careful consideration, we decided to accept.
“We concluded that it is better for shareholders that we sell our interest in WIG at this attractive price and look to recycle the capital into new opportunities.
“We are proud of WIG’s achievements during the period of our ownership. We are confident that it will continue to prosper in future under new owners and with the continued strong leadership of CEO Scott Coates and his management team.”
Wireless Infrastructure Group Scott Coates, CEO of Wireless Infrastructure Group, said: “We are delighted to welcome Brookfield as our shareholder and for the opportunity to partner with large-scale patient capital.
“Brookfield is one of the world’s largest infrastructure investors and its focus on data infrastructure and developing assets that can transform communities, aligns with our ambition to help improve connectivity across the UK.”
“After a successful partnership with 3i, this deal marks an opportunity to shift gears for WIG.
“With the backing of large-scale capital, WIG is now ideally positioned to explore more strategic infrastructure combinations with mobile operators.
“WIG’s industry leading indoor networks already serve buildings with over 1.25 billion visitors a year and this transaction brings us alongside one of the world’s largest real estate owners.”
Brookfield Infrastructure CEO Sam Pollock said: “We are very pleased to be partnering with the management team at WIG to support their continued growth.
“We have been impressed by the Company’s accomplishments to date and look forward to supporting WIG’s continued expansion, both in products and geographies.
“WIG is our first investment in UK data infrastructure and underpins our commitment to both the sector and country.”