Digital Infrastructure Investment Fund DIIF

Posted on July 13, 2017

Altnets Given Investment Boost

New Funds have been announced on 4th July, that provide investment directly focused towards alternative network providers (altnets).

The Digital Infrastructure Investment Fund (DIIF) is now ‘open for business’ and is looking for companies that are building the future digital communications infrastructure for the UK, with an emphasis on Fibre (and to a lesser extent, Wireless) networks.
The Fund has been ‘kick-started’ by £400m of HM Treasury funds, which is being at least matched by other institutional investors. Three Fund Managers have been appointed to allocate and administer the funds:

• M&G Infracap, who in partnership with Cameron Barney (ITS’ own financial advisors and fund managers) have formed DIIP- the Digital Infrastructure Investment Partnership. DIIP will focus on providing funds in return for equity in fast-growing, capital intensive altnets that have ambitions to roll-out full-fibre infrastructure at scale

• M&G Investments, who are part of Prudential and have 20 years’ experience in financing infrastructure, with over £10bn provided for telecoms infrastructure. They will focus on providing debt financing for major projects and will therefore probably be most attractive to altnets who are developing already successful business models- such as ITS’ urban concession networks.

• Amber Infrastructure will run the National Digital Infrastructure Fund (NDIF). Amber specialise in bespoke finance solutions for utility and infrastructure business, with over £18.3bn of debt and equity finance under management. They also have a strong track record in helping finance public/ private partnerships or joint ventures; many of ITS’ activities involve such partnerships, such as Skylon Park with Herefordshire County Council.

All three fund managers have a target allocation from the DIIF- but will also compete to draw down funds from the total ‘pot’ of c. £1bn over the 4 years of the scheme’s planned life. It is expected that ‘deals’ will be struck in the region of £10-25m each- but this will obviously vary against the differing nature of the schemes and financing. In every case, the funds will be given to altnet providers to deliver.

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David Cullen, ITS’ Director of Regulation and Policy says;

“ITS sees this as a very exciting and positive step to accelerating growth in the sector, especially for those altnets that are now maturing and need the ability to ‘top up’ the capital required by large fibre rollouts. We will certainly look at using DIIF finance for our schemes going forwards.”

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