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Pensions

Institutions commit capital to rural high-speed broadband roll out

Institutions commit capital to rural high-speed broadband roll out

Sebastian Cheek
Friday 5th May 2017

A group of investors including RPMI Railpen has invested £110m in a company providing ultrafast broadband to rural areas of Britain.

Railpen has invested £35m in broadband provider Gigaclear and purchased £10m of its existing shares.

Elsewhere, Infracapital, the infrastructure investment arm of M&G Investments, has committed £60m and Woodford Investment Management has provided a further £15m.

The investment is part of a round of equity funding by Gigaclear to build new full fibre broadband networks for homes and businesses in the UK’s rural communities which suffer from poor broadband connectivity and have been under-served by incumbent providers.

In recent months, Gigaclear has won tenders to deliver its broadband network across Devon, Somerset, Gloucestershire, Herefordshire and Northamptonshire through the government-backed Broadband Delivery UK (BDUK) programme.

Railpen investment director Paul Bishop said this roll out has provided a significant opportunity for the scheme to “generate strong returns over time and help fulfil our mission to pay members’ pensions securely, affordably and sustainably”.

“We see the partnership with Gigaclear as a natural fit,” he added.

Infracapital, Gigaclear’s largest shareholder, invests in the company through its greenfield infrastructure strategy on behalf of a wide range of institutional and pension fund clients, including an unnamed UK local authority pension fund.

Infracapital, co-founder and director Ed Clarke said greenfield infrastructure projects such as this offer institutional and pension fund investors early access to assets that over the longer-term can generate predictable cashflows increasing in line with inflation.

He added: “We are playing an important role in getting the UK connected through our investment in Gigaclear. This is a unique opportunity to invest at an early stage in the development of high speed communications infrastructure for the UK’s underserved rural population.”

Woodford Investment Management first invested in Gigaclear in June 2014 in the Woodford Equity Income fund and a year later, in May 2015, it became a part of the Woodford Patient Capital Trust portfolio.

In a Patient Capital Trust update published in March, the firm said it was attracted by Gigaclear’s “robust business model and its highly experienced management team”.

It added: “We see Gigaclear’s future as very bright and, although the road ahead may not always be smooth, we believe the business is very well-positioned to continue to deliver attractive long-term growth and create meaningful shareholder value in the process.”

Gigaclear chief executive Matthew Hare said the investment will enable the company to step up its speed of network delivery and offered a clear signal that investors have confidence in its continued expansion and success.

“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,” he added.

 

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