Sector focus: Digital and telecom

The sector has cemented its place in investor portfolios, and has been strengthened as the pandemic showed how crucial digitisation is for economic advancement.

The global spread of covid-19 has singularly reaffirmed to governments – and the private sector – the importance of digitisation and connectivity.

The covid crisis unleashed an immediate need to have our digital systems in order. With entire offices, education institutions and major commerce going remote in 2020, the need to invest in our digital systems has become urgent.

Covid also served as a great reminder for governments, cities and businesses that investing into digitisation to integrate remote areas and grassroot economy is essential and needs to happen as soon as possible.

Digital trends extend to healthcare as well. Doctor visits became telemedicine and virtual platform appointments, and forecasts suggest that all doctor visits will become telemedicine-led by 2025.

All of this is stressing how important technology and digitisation is becoming for livelihood.

According to a McKinsey report, companies have accelerated the digitisation of their customer and supply-chain interactions and of their internal operations by three to four years.

And the share of digital or digitally-enabled products in their portfolios is seven years ahead of projected levels.

Stories of the year

Covid-19 only increased the appetite for broadband and data centres

June 2020
Alinda Capital Partners acquires Glide Group, a broadband provider primarily active in the UK, from Inflexion

Paris-based Vaubaun Infrastructure Partners and Axione launch a new €6bn digital infrastructure platform

GI Partners closes its debut digital infrastructure fund on $1.8bn

Stonepeak Infrastructure Partners cracks open its fourth flagship fund to acquire the $8.1bn US telecommunications company Astound Broadband

As a result, this has also led investors to focus on increasing exposure to digital infrastructure in their portfolios alongside traditional infrastructure assets.

According to a Macquarie report, globally, this weight of capital has buoyed activity in M&A markets, with the value of disclosed digital infrastructure M&A transactions between April and September 2020 reaching $24 billion across 28 transactions, an increase of 150 percent versus the same period in 2019.

Active investment

Among large fund closings in the space, private investment firm GI Partners held a final closing of its inaugural Data Infrastructure Fund with $1.8 billion in capital commitments from a broad group of investors in September 2020.

The fund was oversubscribed, surpassing its initial target of $1.25 billion.

Global investment firm KKR announced in May 2020 that it will invest $1 billion from its latest global infrastructure fund into building data centres for European technology companies.

Investment in terrestrial fibre networks is also becoming crucial for building an inclusive digital economy, as well as last-mile needs and high-speed internet through homes and enterprises.

The pace at which we are transitioning to an ever-more digital world, coupled with the aftermath of the coronavirus pandemic, show how digital infrastructure has proven its value to infra investors as an essential part of a well-diversified portfolio and an asset class that will continue to develop pace.