Digital Colony bets on digital infra in Brazil

The firm's acquisition of Highline is its first in Brazil, a market Digital Colony believes will experience exponential growth in digital infra.

Digital Colony Management has acquired Highline do Brasil II Infraestrutura de Telecomunicações from Patria Investments, the firm that founded the telecom company in 2012.

The acquisition of Highline adds a platform company to Digital Colony’s portfolio that builds and manages telecommunications towers for the country’s largest mobile network providers: TIM, Vivo, Claro and Oi. Financial terms for the transaction were not disclosed.

Steven Sonnenstein, a managing director at Digital Colony, told Infrastructure Investor that the firm had been in discussions to buy Highline, its first investment in Brazil, for over a year and was drawn to the high-growth potential for digital infrastructure in an emerging market.

“South America is probably about five to eight years behind North America in terms of deployment of digital infrastructure, so our expectation is that the region’s growth will continue exponentially into the next decade,” Sonnenstein explained.

He added that Digital Colony is positioning itself to “capture that growth”.

Digital Colony, owned by real estate firm Colony Capital, invested through its inaugural infrastructure fund Digital Colony Partners, which is solely focused on the digital infrastructure space and closed on $4.05 billion in May. Sonnenstein declined to disclose the returns Digital Colony expects its Highline investment to generate.

Earlier this year, Digital Colony announced a partnership with Swedish private equity firm EQT to acquire and take private North American broadband provider Zayo Group for $14.3 billion. It also announced investments in UK wireless infrastructure company Spyder Facilities and the Finnish internet company Digita Oy.

The firm began in 2018 as a joint venture between Colony Capital (then Colony NorthStar) and digital infrastructure company Digital Bridge. In July, Colony Capital acquired Digital Bridge for $325 million.