Infracapital, Woodford in Gigaclear equity injection

The fund managers have contributed £24m to accelerate the deployment of UK rural fibre optic broadband.

Infracapital , the infrastructure arm of UK-based M&G Investments , and Woodford Investment Management are injecting £24 million (€30 million; $34 million) of equity into UK communications operator Gigaclear.

The new equity adds to a €25 million January loan from the European Investment Bank ( EIB ) and ups Gigaclear's value to £115 million. The investment is being done out of Infracapital's recently launched £1 billion greenfield fund , to which the EIB is also considering a contribution.

Infracapital co-founder and director Ed Clarke said the new fundraise addresses Gigaclear's near-term plans: “Gigaclear has a clear roadmap, which gives good visibility as to the medium-term cash requirements.” Infracapital had already invested up to £20 million in Gigaclear.

Gigaclear will use the proceeds to accelerate deployment of fibre optic networks, bringing high-speed broadband to the UK's rural population. The firm claims its networks are 30 times faster than the UK average. It has already built 60 such networks and has a further 25 in construction. It is targeting a market of 1.5 million residential and business rural consumers.

Clarke shed some light on the nature of Gigaclear's investments: “This has the classic characteristics of a greenfield project – we are laying fibre to connect people's homes and there's a rollout period after which one would expect it to become a long-term operational asset. Most of the greenfield projects you think about are power plants or a new road. In this case you are laying cable, so it's more akin to a network of pipes for a gas or a water utility.”

Gigaclear's Stephen Nelson added: “Unlike traditional greenfield, which is typically one big construction period and then handover, Gigaclear is a series of mini projects which gradually build out the network.”

Infracapital's greenfield fund follows last year's creation of a new greenfield arm headed by former 3i Infrastructure partner Andy Matthews. Sources previously told us Matthews will head the fund, with ex-3i staffer Michele Armanini also involved in the effort. 

Last October , the firm also launched a UK-focused bioenergy platform alongside Helios UK BIG, Aurium Capital Markets and the Foresight Group . It committed £160 million to the venture, with Helios pledging £30 million.