CORD Cordiant Digital Infrastructure Limited

This announcement contains inside information.

25 October 2024

LEI: 213800T8RBBWZQ7FTF84

Cordiant Digital Infrastructure Limited

Belgian Data Centre Acquisitions

Cordiant Digital Infrastructure Limited (the "Company" or "CORD"), an operationally focused investor specialising in digital infrastructure, managed by Cordiant Capital Inc ("Cordiant", or the "Investment Manager"), is pleased to announce agreements to, in partnership with TINC NV ("TINC") and another Cordiant-managed fund, acquire and combine Belgian data centre provider DCU Invest NV ("Datacenter United", or "DCU"), and the data centre business of Proximus Group (the "PDC Business", together with DCU the "Combined Group"). CORD and the other Cordiant-managed fund will acquire a 47.5%¹ economic interest in the Combined Group for a total equity consideration of €92.3 million.

DCU is a Tier III/IV data centre operator with 9 data centres across 8 locations in Belgium. CORD and the other Cordiant-managed fund have agreed to acquire 47.5%¹ of the share capital of DCU via a mix of new primary equity and secondary share acquisitions from TINC, the Belgian infrastructure investor, and DCU's Chief Executive Officer, Friso Haringsma, at an enterprise value of €72.5 million. Following completion of the DCU Transaction, TINC will continue to hold 47.5% of the share capital of DCU and Mr Haringsma 5.0% (non-voting). The new primary equity will provide funding for DCU's acquisition of the PDC Business.   

The PDC Business consists of 4 data centres across 3 locations in Belgium. DCU has agreed to acquire the PDC Business from Proximus Group, the incumbent Belgian telecommunications provider, for an enterprise value of €128 million. Prior to closing, the PDC Business will be transferred to a newly formed company and DCU will acquire the entire share capital of this entity. Mr Haringsma will become the CEO of the Combined Group and Steven Marshall, Chairman of Cordiant Digital, will become Chairman of the Board of Directors.

The Combined Group, on a pro forma basis, has 13MW of IT power, generated revenues of c.€40.3 million and had EBITDA of €15.1 million in 2023. Closing leverage is expected to be modest, with outstanding gross debt of c.€10.5 million as at 31 December 2023. The Combined Group has a capacity expansion potential of an additional11.1MW, most of which could be built across the existing 11 locations.

As part of the transaction, Proximus has agreed a long-term inflation-linked master services agreement ("MSA") with the Combined Group, for 10 years with two 5-year option periods, as well as certain other ancillary agreements which will govern the overall commercial relationship between the parties. Upon completion of the transaction, Proximus, as a direct customer, will use 37% of the Combined Group's IT power capacity. Other customers across the Combined Group include a mix of blue-chip corporates and government bodies, resulting in overall current capacity utilisation of c.80%.

The Investment Manager will contribute its expertise in data centres to help drive the performance of the Combined Group, which will benefit from economies of scale and cost synergies. These acquisitions will further expand the Company's EU data centre portfolio, and the Investment Manager sees opportunities for the acquired data centres to benefit from the Company's wider network of data centre assets, for example, those existing customers who may require a second or back-up site in the EU.

The acquisitions are conditional upon the receipt of satisfactory regulatory approvals and the completion of the acquisition of both businesses. The purchase considerations for each are also subject to customary adjustments.

The acquisition of the Combined Group is expected to close early Q1 2025.

Cordiant has reached agreement in principle for a separately managed fund to invest €20 million alongside the Company in the Transaction, which would reduce the Company's indirect shareholding in the Combined Group to 37.2%. This co-investment remains subject to agreement between the parties of definitive documentation.  

The Company will acquire its portion of the Combined Group using proceeds of the Eurobond facilities put in place in June 2024.

The Company's net gearing ratio was 38.4% as at 30 June 2024. On a pro forma basis, following the investment by the Company in the Combined Group, the Company's net gearing ratio would be 42.1%. On the same pro forma basis, the aggregate annual EBITDA of the Company's portfolio, including the Company-level costs, and its share of the Combined Group would be £138.7 million

The Company's total available liquidity disclosed as at 30 June 2024, pro forma for this acquisition and assuming CORD subscribes to the full €92.3 million equity consideration, is £257.5 million.

^{1.     The Company and TINC will each own 50% of the voting rights of the Combined Group}

Shonaid Jemmett-Page, Chairman of the Company, said:

"The Board is delighted to announce the agreement to acquire these two data centre businesses. By bringing these businesses together, there is the opportunity to create a market leading retail and wholesale data centre business in this attractive geography. These acquisitions further diversify the Company's portfolio, provide an opportunity for co-investment and also provide the potential for further EBITDA and NAV growth through the build-out and sale of the combined business' remaining space and power following closing."

Steven Marshall and Benn Mikula, Co-Founders of Cordiant Digital Infrastructure Management, said:

"We are delighted to be working with TINC, who, as a long-term investor, shares a common strategic vision for this business and will be able to co-invest alongside the Company in the further expansion of the facilities. This transaction could only be successfully executed because of the Investment Manager's ability to create a potentially valuable combination from a complex situation. The acquisition provides a good foundation for the Manager's value creation plan for these assets. The transaction shows the Manager's operational data centre expertise and ability to source transactions that meet its demanding criteria for capital deployment."

The Company will be hosting a remote presentation for analysts On Friday, October 25^th at 12.00pm BST. For those wishing to log in to this, please contact Ali AlQahtani at Celicourt via CDI@celicourt.uk.

For further information, please visit www.cordiantdigitaltrust.com or contact:

Notes to Editors:

About the Company

Cordiant Digital Infrastructure Limited primarily invests in the core infrastructure of the digital economy - data centres, fibre-optic networks, telecommunications and broadcast towers - in Europe and North America. Further details about the Company can be found on its website at www.cordiantdigitaltrust.com.

The Company is a sector-focused specialist owner and operator of Digital Infrastructure, listed on the London Stock Exchange under the ticker CORD. In total, the Company has successfully raised £795 million in equity, along with a debt package that includes a €375m Eurobond with a consortium of blue-chip institutions; deploying the proceeds into five acquisitions: CRA, Hudson, Emitel, Speed Fibre and Norkring, which together offer stable, often index-linked income, and the opportunity for growth, in line with the Company's Buy, Build & Grow model.

About the Investment Manager

Cordiant Capital Inc is a specialist global infrastructure and real assets manager with a sector-led approach to providing growth capital solutions to promising mid-sized companies in Europe, North America and selected global markets. Since the firm's relaunch in 2016, Cordiant, a partner-owned and partner-run firm, has developed a track record of exceeding mandated investment targets for its clients.

Cordiant focuses on the next generation of infrastructure and real assets: sectors (digital infrastructure, energy transition infrastructure and the agriculture value chain) characterised by growth tailwinds and technological dynamism. It also applies a strong sustainability and ESG overlay to its investment activities.

With a mix of managed funds offering both value-add and core strategies in equity and direct lending, Cordiant's sector investment teams (combining experienced industry executives with traditional private capital investors) work with investee companies to develop innovative, tailored financing solutions backed by a comprehensive understanding of the sector and demonstrated operating capabilities. In this way, Cordiant aims to provide value to investors seeking to complement existing infrastructure equity and infrastructure debt allocations.

About DC Invest NV

Datacenter United, a subsidiary of DC Invest NV, is a market leading Tier III/IV data centre operator based in Belgium. The group operates 9 data centres across 8 locations in the Flanders region, with a strong presence in Antwerp, Ghent and Bruges. The group has an experienced management team led by Friso Haringsma.

About the PDC Business

The PDC Business consists of the Tier III Brussels data centre assets currently owned by Proximus, the market leading telecommunications operator in Belgium. The business has 4 data centres in 3 locations, all around the Brussels region. Proximus remains a key customer of the business under a new 10-year index-linked contract with two 5-year extensions.

About TINC

TINC participates in companies that realise and operate infrastructure. TINC aims to create sustainable value by investing in the infrastructure for the world of tomorrow. Focus areas include public infrastructure, energy infrastructure, digital infrastructure and selective real estate.

Founded in 2007, TINC has been listed on Euronext Brussels since 12 May 2015. As a listed investment company, TINC has a platform for the further financing of its growth. This platform is accessible to both private and institutional investors, and allows them to invest in capital intensive infrastructure in a liquid, transparent, and diversified way.

TINC is currently active in Belgium, the Netherlands, Ireland and France, and aims for further geographical expansion into other European regions, preferably through established and proven partnerships with industrial, operational, and financial partners.