Information on the Target

BBV, headquartered in Frankfurt, was founded in 2014 with a mission to deploy Fibre to the Building (FttB) networks in underserved regions. To date, BBV has successfully established a network that serves over 33,000 premises in the federal states of Thuringia and Baden-Württemberg. Under the ownership of Infracapital, the company is set to continue expanding its infrastructure and leverage its significant growth pipeline.

Industry Overview in Germany

Germany currently ranks among the most underserved markets for fibre connectivity within Europe, with a Fibre to the Home (FTTH) penetration rate at a mere 10%. This figure starkly contrasts with the European average of 36%, highlighting a significant opportunity for growth and investment in the sector. The gap illustrates the urgent need for enhanced digital infrastructure to support both residential and business needs across the country.

The demand for high-speed internet is accelerating due to increasing reliance on digital solutions for work, education, and entertainment, further emphasizing the necessity for expanded fibre infrastructure. Local governments and municipalities are recognizing this demand, often collaborating with private companies to facilitate improvements in connectivity.

Furthermore, the German government's commitment to increasing digital infrastructure as part of its broader economic strategy underlines the vital role that private investments will play in bridging this connectivity gap. This presents an ideal environment for targeted investments in fibre networks, particularly in underserved areas.

The Rationale Behind the Deal

The acquisition of BBV represents Infracapital's continued commitment to investing in sustainable infrastructure. This investment aligns with Fund III's strategy to support essential brownfield projects that cater to the evolving needs of society, enhancing connectivity for local communities and contributing to long-term economic growth.

By expanding BBV's network, Infracapital aims to leverage its experience in fibre deployment across Europe, specifically in southern Germany, to create significant value while addressing the market's pressing connectivity needs.

Information about the Investor

Infracapital is a leading infrastructure equity investor with a strong track record of successfully deploying funds in essential services and infrastructure across Europe. As part of the M&G Group, Infracapital focuses on sustainable investment strategies that generate both social and financial returns.

This acquisition marks Infracapital's second fibre investment in southern Germany and the sixth from its Private Equity Fund III. The firm is recognized for its expertise in fostering partnerships that enhance critical infrastructure, reflecting its commitment to delivering long-term value.

View of Dealert

This investment in BBV appears to be a strategic move by Infracapital that could yield substantial benefits not only for the firm but also for the communities served by BBV. The fibre market in Germany presents a ripe opportunity for growth, given the currently low penetration rates. Infracapital's involvement can facilitate the necessary capital and expertise to enhance connectivity in key markets.

Moreover, the collaboration between Infracapital and BBV’s management team is expected to foster innovation and expansion. The backing from an experienced investor may also accelerate the rollout of fibre services, ensuring that the increasing demand for high-speed internet is met effectively.

Considering the critical need for improved digital infrastructure and the outlined strategic plans, this acquisition could potentially lead to a significant uplift in BBV’s service capabilities, contributing positively to local economies and creating long-term growth opportunities for Infracapital’s investors.

Overall, this deal holds promise as a strong investment that not only serves a vital public need but also aligns with Infracapital’s sustainability goals. Given the current market dynamics, BBV's growth trajectory under Infracapital’s stewardship could be a key driver of success in the fibre sector.

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