Stonepeak plugs $500m into European fibre networks

The deal to buy a majority stake in euNetworks comes as the firm continues to garner commitments for its third fund.

Stonepeak Infrastructure Partners has made its first investment in Europe with a $500 million deal for bandwidth provider euNetworks.

Stonepeak has bought an undisclosed majority stake in the London-headquartered company with networks across 15 countries. It owns and operates 14 fibre-based metropolitan networks alongside 300 data centre connections and 13 cloud platforms. euNetwork’s projects largely span across central and western Europe, although it is also present in Denmark, Sweden and Finland.

Stonepeak’s $500 million investment will be used to fund euNetwork’s organic and inorganic development. The bandwidth provider last week reported 10 percent growth in revenue from Q3 2016 to €34.9 million in the latest quarter and an EBITDA of €10.7 million, a 41.2 percent year-over-year increase.

“euNetworks operates in a market where the key drivers of bandwidth growth are data centre to data centre, cloud and carrier connectivity,” said Brian McMullen, managing director of Stonepeak. “euNetworks has developed a fibre footprint across Europe that is highly differentiated in addressing that demand.”

Stonepeak could not be reached at the time of going to press for further details on which fund the deal was made from. The firm is currently fundraising for its third fund, which is hard-capped at $7 billion. However, a source told Infrastructure Investor last month that Stonepeak’s $3.5 billion second fund was 85 percent invested and that Fund III’s investment period will begin soon after its predecessor is fully deployed.

The third fund reached a first close of over $5 billion at the end of the summer and is expected to hold another close imminently. It is targeting a net return of about 12 percent inclusive of a 4 percent cash yield, according to LP documents. It has an 8 percent hurdle rate.