Deutsche GigaNetz closes new round of financing for fiber optic expansion
- Existing banking syndicate increases commitment volume by EUR 250 million, Deutsche GigaNetz fully utilizes increase option
- Strong interest leads to oversubscription of the transaction
- SMBC Bank and Edmond de Rothschild join as new creditors
Deutsche GigaNetz GmbH, one of the leading telecommunication companies for the construction and expansion of fiber optic networks from Germany, has finalized its second capex financing with an international banking consortium. Members of the consortium are ABN-AMRO, ING, KfW, KfW IPEX, LBBW, NordLB, Kommunalkredit Austria, SEB and NatWest. Deutsche GigaNetz's first financing round of EUR 355 million was signed in July 2022 with an additional increase option of EUR 250 million. The existing consortium and, for the first time, SMBC and Edmond de Rothschild participated in the successful implementation of this option. Despite a challenging market environment, the transaction was oversubscribed. In addition, Deutsche GigaNetz will receive a further increase option of 200 million euros.
In 2022, DWS Group, a leading global asset manager based in Germany, also joined Deutsche GigaNetz as the second main investor alongside InfraRed Capital Partners.
"A high-performance fiber-optic network is a real competitive advantage for municipalities and cities in Germany, therefore demand for an expansion of fast Internet connections is high. This is also reflected in the steep increase in the number of new cooperation agreements that we have been able to sign with municipalities over the past twelve months. The fresh capital will finance our expansion targets for the coming years for all current and new projects," says Jan Budden, CEO and co-founder of Deutsche GigaNetz. Cooperation agreements for the construction of high-quality fiber optic networks are currently in place with over 200 municipalities across Germany. The company has around 650 employees at eight locations and is already active in 14 federal states.
Budden is particularly pleased to have won two additional infrastructure lenders for the Deutsche GigaNetz, SMBC and Edmond de Rothschild. Budden: "We have been able to successfully conclude our second financing round despite the volatile market and the current interest rate level and we see this as a vote of confidence in Deutsche GigaNetz." This year’s financing agreement includes a promotional loan facility from KfW's ERP Digitization and Innovation Loans program, loans from a consortium of banks and, for the first time, a share of the loan was contributed by institutional debt investors via a private debt fund managed by Edmond de Rothschild. Deutsche GigaNetz has also secured the option of a further increase for new capex facilities with the consortium and other institutions. “The long-term financing of Deutsche GigaNetz is proceeding according to plan and in accordance with our expansion strategy," adds Mirko Jerrentrup, CFO and co-founder of Deutsche GigaNetz.
Investors and financing banks backing Deutsche GigaNetz business plan"The expansion of fiber optic networks is a decisive building block in the transformation towards an innovative and sustainable economy in Germany. Smart cities, digital administration, autonomous driving and large AI applications will only become a reality if we have high bandwidths that only a fiber optic infrastructure can provide. As a universal bank, we are committed to this goal," says Thomas Schulz, Head of Infrastructure and Transport Finance at LBBW, the largest lender of Deutsche GigaNetz.
ABN-AMRO, acting as ESG coordinator of the consortium, has a particular focus on sustainability. Together with Deutsche GigaNetz, ABN-AMRO has implemented the framework for a sustainability-linked loan, a corporate facility linked to sustainability goals. "Fiber optic networks are not only the backbone of the digital transformation, as they provide the infrastructure to process the increasing data volume. Fiber optic technology also significantly reduces the energy consumption of the transmission of large amounts of data. The technology requires only a fraction of the electricity used by copper networks. It is part of our DNA as a lender to promote resource-saving projects," says Thomas Buijs from ABN-AMRO.
“With the second financing round, Deutsche GigaNetz has again proven its operational success. We are pleased that Deutsche GigaNetz can continue its growth plan and we thank the banks for their trust placed in us," commented Thomas Kalthöfer, Senior Principal for Infrastructure Investments at DWS.
InfraRed, the original investor, remains fully committed to Deutsche GigaNetz’s long-term plans and is continuing to invest in Deutsche GigaNetz in line with existing commitments. Thomas Buss, Partner at InfraRed said: “InfraRed’s support of DGN reflects our ongoing commitment to investing in developing sustainable infrastructure for tomorrow’s smart cities and connecting people to employment, education and each other. As a national operator, Deutsche GigaNetz has a key role to play in ensuring communities in Germany remain competitive in times of digitisation. Good high-speed internet connectivity is a key factor when companies select certain locations."
German fiber optic market needs to catch upIn Germany, there is great pressure to take action for a timely, profitable and demand-oriented expansion of the fiber optic network that will enable private households, the housing industry and the B2B sector to be connected to the Internet at gigabit speeds throughout the country. Following the end of the low-interest environment, demands of the capital market on the fiber optic sector have increased significantly. Deutsche GigaNetz's business model is perfectly prepared for this. In addition to its retail and business segment as well as wholesale business, Deutsche GigaNetz is also committed to an open access approach for its own networks. "The newly completed financing round will allow us to confidently pursue and drive forward our future market development. Our financing partners are fully convinced of the strategy of a highly scalable platform. This is a strong foundation for long-term growth. We will continue to make a significant contribution to digitalization in the future," says Budden.
