First deal for Bouwfonds’ €300m German broadband fund

The vehicle secures tie-up with local provider BBE and Chinese firm ZTE to finance fibre-optic network in Bretten.

Bouwfonds Investment Management’s second broadband fund has secured its maiden deal following a tie-up with local provider BBV and Chinese firm ZTE.

The “double-digit million” transaction will finance a fibre-optic network in Bretten, Baden-Württemberg, an area Bouwfonds said is “traditionally underserved” in terms of broadband infrastructure.

The network will be built by BBV and ZTE and purchased by the Bouwfonds Communication Infrastructure Fund II only once construction has been completed. BBV will subsequently lease and operate the network.

“Bretten and its surrounding areas are a traditionally underserved region in terms of broadband infrastructure,” said Bas van Dongen, managing director of communication infrastructure Germany at Bouwfonds. “Here, together with BBV, we can fill an important gap. In addition, the competition on the ground by other internet providers is limited. This allows the operator BBV – and thus the fund – to achieve very stable cashflows. It is also important for investors that the fund bears no development risks.”

CIF II reached a €100 million first close in April ahead of a €300 million target following commitments from German pension funds and insurance companies. The fund, focused exclusively on the German market, seeks to invest between €500 million and €600 million and deliver a yield of between 5.5 percent and 6.5 percent.

Its predecessor was a 2009-vintage, €700 million vehicle focused on Dutch telecoms infrastructure. It was delivering a 20.9 percent return as at the end of last year, according to documents from Bouwfonds, a subsidiary of Rabobank.