Stonepeak seals largest digital infra deal with $8.1bn Astound buy

Astound Broadband is the manager's eighth digital infrastructure deal, with the sector accounting for about half of its portfolio.

Stonepeak has completed its largest investment in the digital infrastructure sector following the $8.1 billion acquisition of Astound Broadband.

The deal, which was initially agreed last November, sees Stonepeak acquire the company from private equity group TPG. The latter made its investment in 2016 via the acquisitions of RCN Telecoms and Grande Communications, worth $2.2 billion. TPG added Wave Broadband and enTouch in 2018 and 2020 respectively. Another four companies were added after the deal was agreed.

RCN, Grande, Wave and enTouch serve over one million customers with 23,000 miles of fibre across eight of the 10 largest metros in the US. The company is now the sixth largest cable operator in the US. In addition to high-speed broadband and fibre services, Astound also provides digital TV and phone services.

“In 2014 and 2015, we began expanding and having tremendous success and we started looking at projects with 40 percent IRRs and wanted to do more of that, so we started doubling it,” Jim Holanda, chief executive of Astound, told Infrastructure Investor. “With Stonepeak, our potential ability to continue to double the amounts of network consumption we are doing with strong IRRs is probably the single most exciting opportunity that we both share in terms of our ability to add value and scale to this business over and above where the rest of this industry is.”

Astound’s business is geared 80 percent towards providing broadband to residential customers and 20 percent to commercial ones, although Holanda expects the latter to grow more in the coming years, in line with industry trends.

“With Astound, we think we’re backing the best team in the space,” added Brian McMullen, senior managing director at Stonepeak. “The entirety of the network is gigabit-enabled. In terms of the opportunity with infrastructure ownership, we have aspirational expansion plans. When you think about the homes we’re going to pass here with fibre, we may be the most active builder in the country of high-speed broadband to the home. That potential is something we look for across all our digital infrastructure investments.”

Astound is the eighth communications asset acquired by Stonepeak and its second in the US. The digital infrastructure sector accounts for about half of its portfolio across its funds, with “cumulative enterprise value and equity commitments of more than $30 billion”, Stonepeak said in a statement.

The firm is raising its Stonepeak Infrastructure Fund IV, believed to be targeting $10 billion. It had raised $9.6 billion as at March this year, according to documents from the Connecticut Retirement Plans and Trust Funds.