Infracapital, Amber to spearhead UK’s £1bn fibre rollout

The fund managers will oversee three separate vehicles intended to leverage equity and debt investments in fibre broadband across the UK.

UK-based Infracapital and Amber Infrastructure have been tasked by the government with unlocking over £1 billion ($1.3 billion; €1.1 billion) of capital to accelerate full-fibre broadband in the country.

Following on from Chancellor Philip Hammond’s initial announcement of the fund in November, three separate vehicles have been established to initiate debt and equity investments in improving broadband connections across the UK with the rollout of fibre networks.

Infracapital, partnering with internet infrastructure merchant banking specialist Cameron Barney, will largely be responsible for the equity investments, with plans to leverage funds from pension funds and other institutional investors through a platform named Digital Infrastructure Investment Partners.

Infracapital’s appointment follows its recent participation in a £111 million fundraise in rural broadband provider Gigaclear alongside Railpen and Woodford Asset Management, while last month it emerged as a winner in a tender in Poland to build and operate advanced fibre optic networks with Nokia.

“The widespread availability of high-speed broadband is an essential ingredient in driving the competitiveness of the UK and offers an attractive investment opportunity for infrastructure investors, many of whom are pension funds,” said Ed Clarke, co-founder of Infracapital.

Its parent company, M&G Investments, will manage a debt fund as part of the strategy and will provide financing to businesses to kick-start the improved connection. The firm currently manages over £10 billion of debt investments in public and private telecoms and cable companies.

M&G will be joined by Amber Infrastructure which will manage the National Digital Infrastructure Fund, a vehicle largely designed to provide debt but which will also examine equity investment opportunities. Amber said the government has agreed to pledge £150 million to the NDIF, with a further £250 million of its committed £400 million understood to seed funds run by Infracapital and M&G.

International Public Partnerships, the Amber-managed listed subsidiary, will commit £45 million to the vehicle and Amber itself will invest £5 million. Opportunities within the fibre broadband sector that meet INPP’s mandate will be made through the NDIF during the four-year investment period. While Infracapital and M&G declined to state their expected returns, INPP said the NDIF will be managed to meet its targeted return rate of between 8 and 9 percent.

“We see full fibre to the home broadband connectivity as becoming part of the core infrastructure of the future – just as gas and electricity distribution are today,” said Giles Frost, chief executive of Amber Infrastructure.