On Monday, Wren House Infrastructure Management, the London-based captive fund that manages the infrastructure portfolio of Kuwait’s sovereign wealth fund (KIA), announced that it has agreed to buy i3 Broadband, a telecom fiber provider based in the U.S. Midwest state of Illinois. Price and other deal terms were not disclosed.
The sellers are Seaport Capital, a lower-middle-market private equity firm that invests strictly in telecom, information and media companies, and Countrywide Broadband. Together the two companies have owned i3 since December 2016.
i3 is the leading fiber-to-the-home (FTTH) services operator in Central Illinois, providing gigabit-speed broadband, video and voice services to residential and business customers. i3 has been a Seaport Capital portfolio company for the past four years.
Eye on expansion
Announcing the deal, Wren House CEO Hakim Drissi said, “i3 is perfectly positioned to meet the growing demand for reliable, high-speed connectivity to homes and businesses. i3 has built an impressive fiber network and cultivated strong customer relationships throughout their local markets. We are excited to partner with i3’s exceptional management team to accelerate the Company’s growth, while continuing to deliver category-leading service to i3’s communities.”
“i3 is committed to providing local communities with access to the most reliable, high-speed broadband connectivity available. These services are more critical than ever, allowing residents to easily e-learn and work-from-home, and communities to grow. Wren House’s investment will allow us to expand our network and enhance our services, all while remaining committed to our customer-first culture,” added i3 Broadband CEO Dan Kennedy.
A little background
The sale marks the latest successful exit for telecom investor Seaport, which has previously offloaded data center operator Peak 10 (now Flexential) to Welsh, Carson Anderson & Stowe, and cell tower owner operator Tower Ventures II to National Grid. Seaport still owns Municipal Communications II, the developer, owner and operator of wireless cell towers in the U.S. Southeast, Northeast, and Upper Midwest.
Seaport is an early-stage investor in communication infrastructure and services companies, primarily owners and/or service providers of broadband and wireless physical infrastructure, including fiber and cell towers.
These companies tend to generate recurring revenue, demonstrate organic EBITDA growth and high incremental margins, and occupy fast-growing but fragmented industry niches with high barriers to entry.
Seaport typically commits $10-30 million per investment, targeting companies with an enterprise value of $25-150 million and annual EBITDA of $3-15 million.
Wren House, meanwhile, targets large-scale investments in the core and core-plus infrastructure space, across multiple industry sectors, including telecoms and utilities, but also transportation, energy, agriculture, healthcare and social infrastructure. To date, Wren House has invested in six business worldwide alongside strategic partners and co-investors.