Railpen joins Infracapital in £111m Gigaclear raise

The UK pension becomes the rural broadband provider’s latest investor alongside existing backers Infracapital and Woodford Investment Management.

UK-based rural broadband provider Gigaclear has secured £111 million ($143.5 million; €130.9 million) in fresh capital after enlisting the support of new investor Railpen.

The £25 billion UK Railways Pension Scheme invested £35 million into Gigaclear’s broadband rollout and spent a further £10 million in buying shares of the company.

Railpen joined up with Gigaclear’s previous investors Infracapital and Woodford Investment Management, which contributed £60 million and £15 million respectively, with another £1 million coming from existing shareholders. The duo previously invested in Gigaclear 13 months ago by injecting £24 million. Infracapital had already provided £20 million in May 2015 as one of the first investments of its greenfield strategy.

The latest wave of capital will enable Gigaclear to build ultrafast fibre-to-the-premises networks across rural Britain following tender wins from the UK government’s £1.7 billion Broadband Delivery UK programme. In unveiling its 5G and broadband strategy in March as part of the Budget, the government said the “vast majority” of investment “will need to come from the private sector”, with limited government financing to be provided as support.

“Full fibre is the future,” Gigaclear’s chief executive Matthew Hare proclaimed. “Millions of rural homes and businesses across the country need better broadband and we want to reach as many of those in rural areas as quickly as possible.”

Railpen’s investment is part of a shift in strategy revealed by Infrastructure Investor in March 2015, with aims of developing the capabilities an institution needs to invest directly – but “without necessarily doing so”. The pension fund’s most recent investment prior to Gigaclear was to refinance a portfolio of 1,911 rooftop solar assets across the UK through the Pensions Infrastructure Platform, in which it was a founding member. The PIP recently downsized its £1 billion Multi-Strategy Infrastructure Fund to £600 million, explaining that a single, co-mingled vehicle was no longer sufficient to meet the needs of all its investors.

“We are pleased to have been able to invest in a great company in a sector we like, focused on serving homes and businesses in rural communities which suffer from poor broadband connectivity and which have to date been underserved by incumbent internet service providers,” said Mirza Delibegovic, investment manager at Railpen.