Antin and Goldman in £538m deal to take UK broadband group private

The bid for CityFibre comes four years after an IPO raised £16.5m, with the pair believing the company ‘better suited’ to private ownership.

Antin Infrastructure Partners and Goldman Sachs have made an offer worth £537.8 million ($750.3 million; €613.9 million) to buy UK-based fibre broadband group CityFibre.

The bid for the AIM-listed company has been recommended for acceptance, with the offer of 81p per share representing a 92.9 percent premium on yesterday’s closing price. CityFibre told shareholders the bid “represents compelling value” given the opportunities and risks faced by the company.

The deal would end CityFibre’s four-year history as a listed company, following an IPO in 2014 which raised £16.5 million. A secondary fundraising four months later raised a further £30 million.

“Under private ownership, CityFibre will be able to gain alternative and potentially easier access to the financing required for its announced fibre-to-the-home deployment,” said Chris Stone, chairman of the company. “This will strengthen the company’s ability to deliver on its vision to provide full fibre infrastructure to 20 percent of the UK market.”

A significant part of this delivery is CityFibre’s partnership with Vodafone, announced in November. The pair have established a 20-year partnership with an initial target of providing full fibre connectivity to one million homes across 12 cities by the end of 2021, expanding to five million homes in 50 cities by 2025. The UK currently has a fibre connection rate to both homes and businesses of about 3 percent.

CityFibre delivered a net loss last year of £16.6 million, rising from £12.6 million in 2016 and £6.4 million in 2015. The company spent £95 million on acquisitions of network assets in 2016, while last year it bought wholesale service provider Entanet Holdings Limited for £29 million. Antin and Goldman Sachs said private ownership would free CityFibre from meeting the public market’s “shorter-term reporting requirements, expectations, and the costs and constraints associated with being a listed company”.

The deal is the second consecutive fibre deal for Antin’s €3.6 billion third fund, following its acquisition of FirstLight Fiber in the US in February. The move is the first in the sector for Goldman Sach’s West Street Infrastructure platform, although it has previous telecoms experience following deals in the US.

The transaction is expected to be completed towards the end of this year.