Less than a year after making its first investment in the wireless communications sector, Stonepeak Infrastructure Partners is teaming up with Digital Bridge Holdings in a recapitalisation of ExteNet Systems, an Illinois-based company which designs, builds, owns and operates distributed networks for wireless carriers.
Stonepeak and Digital Bridge “have committed or arranged over $1 billion in which the interests of existing investors will be acquired and additional capital will be provided to support long-term growth of the business,” the firms said in a statement.
A source with knowledge of the deal told Infrastructure Investor that Stonepeak is funding $405 million of the purchase price through its first infrastructure fund, which closed on $1.65 billion in October 2013. According to the same source, Digital Bridge is providing $305 million of the purchase price, while an additional $375 million in debt financing will bring ExteNet’s total recapitalisation to $1.09 billion.
While Stonepeak declined to comment on the financial details of the transaction, it did disclose the names of the banks providing the debt financing. They are: SunTrust Robinson Humphrey, the administrative agent for the debt financing; Barclays Bank; Deutsche Bank; Toronto-Dominion Bank; CIT Finance; and the Royal Bank of Canada.
The recapitalisation will enable ExteNet to continue pursuing strategic deployment of outdoor and indoor distributed networks, including distributed antenna systems (DAS) and small cells. Founded in 2005, the company owns outdoor and indoor networks in New York City, Chicago, San Francisco, Las Vegas, Dallas, Boston and Houston.
“After a great run with our initial venture investor group who started with us 10 years ago and other significant investors who joined in 2010, Digital Bridge and Stonepeak are the ideal partners for this recapitalisation,” said Ross Manire, ExteNet’s co-founder and chief executive, who along with other key members of the management team will remain with the company and continue to be an investor in it.
Digital Bridge chief executive Marc Ganzi will serve as ExteNet’s chairman. Warren Roll, also of Digital Bridge, will serve as member of the board alongside Stonepeak co-founder and senior managing director Trent Vichie and managing director Brian McMullen.
The company’s current investors are Columbia Capital, Centennial Ventures, Sevin Rosen Funds, CenterPoint Ventures, Palomar Ventures, Quantum Strategic partners and SBA Communications.
“We see a lot of synergies between ExteNet and our other portfolio companies, including Vertical Bridge, which is the largest private tower company in the United States,” Ganzi said.
Stonepeak invested in Vertical Bridge last November in what was its first foray in the wireless communications sector, as it sought to diversify its portfolio which to date is more energy-focused.
In addition to energy and communications, Stonepeak also invests in businesses comprised of hard assets with strategic importance in the power and renewables, transportation, utilities and water sectors. It manages $1.8 billion of capital for its investors and specialises in North American middle-market infrastructure.
An independent firm, Stonepeak spun out of Blackstone Group’s infrastructure division in June 2011. Its co-founders, Michael Dorrell and Vichie, co-headed Blackstone Infrastructure Partners.
Digital Bridge Holdings’ co-founder Ben Jenkins is also a former Blackstone executive, who left the firm in 2011. His most recent position there was senior managing director. In 2013, Jenkins and Ganzi, former founder and chief executive of Global Tower Partners, formed Digital Bridge, a communications infrastructure platform based in Boca Raton, Florida.