Cube chosen to manage EIB’s €500m broadband fund

The bank says the vehicle, set to be launched next year, is close to securing commitments from three anchor investors.

The European Investment Bank has confirmed the launch of a new fund that will seek to raise at least €500 million for investments in broadband infrastructure projects.

A joint initiative by the EIB and the European Commission, the Connecting Europe Broadband Fund will seek to garner capital from both public and private institutions ahead of its launch in the middle of next year.

The EIB’s preparation for the fund was first revealed by Infrastructure Investor in April this year, with a post-summer launch expected. The bank shortly afterwards began searching for a manager to look after the vehicle. Yesterday, it said Cube Infrastructure had been selected as the fund’s custodian, with an official approval set for early next year.

The new broadband vehicle will look to raise at least €500 million for its first closing, although an EIB spokeswoman told Infrastructure Investor there is no particular final target in mind. Its focus will be on underserved areas in Europe which lack access to such infrastructure and projects which do not have access to EU financing. The EIB has previously backed UK firm Gigaclear which invests in broadband infrastructure projects in rural Britain.

Three potential anchor investors have expressed interest in the fund, with Germany’s KfW, Italy’s Cassa Depositi e Prestiti and France’s Caisse des dépôts et consignations all expected to sign up to the vehicle.

The fund will provide investments via equity as well as mezzanine and subordinated debt, with between seven and 12 investments expected each year up to 2021. Ticket sizes will range between €1 million and €30 million. In total, the EIB expects the fund to unlock broadband investments totalling between €1 billion and €1.7 billion in about 20 countries lacking high-capacity networks.

“Until today, smaller-scale broadband projects did not have easy access to funding and EU financial instruments did not exist,” EIB President Werner Hoyer said. “Consequently, projects in less populated or rural areas, where purely private-led initiatives may not see the economic benefits of deploying broadband networks, were difficult to implement. The new fund will help bridge this market gap.”

Greenfield broadband infrastructure in Europe has piqued the interest of investors of late. Paris-based fund manager Mirova is part of a consortium that recently signed a €900 million contract for France’s largest ever broadband PPP, while René Kassis, managing director at La Banque Postale Asset Management, said last week its infrastructure debt fund will be looking at making broadband investments in France, Italy and Ireland.