Infracapital makes £270m Gigaclear takeover bid

Three years after its initial investment, the UK-based fund manager is looking to buy the entire rural broadband provider, but fellow shareholder Railpen has rejected its offer.

UK-based fund manager Infracapital has launched a takeover offer for rural broadband provider Gigaclear in a deal valuing the company at about £270 million ($374.2 million; €303.9 million).

Investing through its £1.25 billion greenfield fund, Infracapital is looking to boost its ownership of Gigaclear, in which it currently holds a 43.2 percent stake and it has received notice of initial acceptance from Woodford Investment Management, which owns 25.4 percent of the company.

The offer comprises 400 pence per each Gigaclear share, a 23 percent premium to Gigaclear’s previous fundraising round in May last year when Woodford and Infracapital increased their investment in the company and UK railway pension scheme Railpen joined as a shareholder.

However, Railpen is proving a stumbling block to Infracapital’s attempt to buy the entire share capital of Gigaclear. The 15.9 percent shareholder has rejected the offer and would like to retain its investment at this stage.

The pension fund declined to comment further.

“We believe that our cash offer recognises the value that has been created, particularly for those investors who supported the company in the earliest stages of its life, and provides an opportunity for existing shareholders to realise substantial gains,” said Ed Clarke, co-founder of Infracapital. “Given the capital requirements of the business going forward, it is not obvious when another material liquidity event might occur in the short- to medium-term for existing shareholders.”

Clarke added that Infracapital has already committed its support to the next round of fundraising required to finance the firm’s rollout plan.

The infrastructure arm of Prudential initially invested in Gigaclear in May 2015 with a £20 million injection. A further £24 million was plugged into the group 11 months later, before Infracapital provided another £60 million in May 2017 as part of a wider £111 million fundraising involving Woodford and Railpen.

Woodford said in 2015 that Gigaclear aimed to provide broadband for more than 20,000 premises by the end of that year and 200,000 in 2018. As of last month, Gigaclear had exceeded 60,000 premises, serving more than 15,000 customers.