A couple of weeks back I wrote in Citywire about an impending new IPO, of D9 Digital Infrastructure from Triple Point.
This week brings confirmation of a rival fund offering, this time from a Canadian based fund manager called Cordiant. The Cordiant Digital Infrastructure fund looks like it has been quietly premarketing for a few months now but is closing in the next few weeks.
As is clear from my Citywire article I maintain that this niche infrastructure space is compelling. I have not made up my mind if I’m going to invest in Cordiant alongside the Triple Point D9 fund but on paper, they look fairly similar.
They are both focused on building a portfolio of data niches including fibre, towercos and data centres. They are both global in focus and they are both Channel Islands registered funds looking to use the Specialist Funds Market – which makes it difficult for private investors to participate at launch.
That said there are some differences and for reference purposes, I have put together a compare and contrast table below. I’ve pulled out the information as best I can from the relevant documents floating around.
|Key variable||D9 Digital Infrastructure PLC||Cordiant Digital Infrastructure|
|Investment focus||Data centres, terrestrial fibre and 5G networks comprise further pipeline assets. Data centre pipeline portfolio
includes >20,000 m2 of
operating assets, with crossover to the Aqua Comms customer base and connected into their
existing sub-sea network
|Digital infrastructure asset values are supported by long-term contractual cash-
flows and offer attractive growth characteristics from the provision of additional
Tenants are typically telecom operators,
software/technology companies and governments.
|Seed Assets||£165m. 30% invested immediately on IPO into Initial Assets, over $3 billion in proprietary pipeline, of which $1 billion is ready to invest in the next 12 months. Initial Assets (Aqua Comms): fully operational, highly resilient and reliable sub-sea fibre systems, long term contracts with the highest quality counterparties, primarily with the FAANGs + Microsoft||The Investment Trust currently has an opportunity pipeline of approximately €1.5 billion. Includes tower operators (UK and UK), backbone fibre data centres, US edge data platform. On ramp up : Substantially committed within 12 months through active and existing pipeline of ~€ 1.5 billion|
|Geographical mix||The overall mix is likely to be c60% global : 40% UK on the initial £400m raise||Nothing specific I can see but the prospectus states that it has “the aim of achieving a long-term balance between North America and Europe.”|
|Dividend target||6% divi in yr 1, payable from IPO. In detail: 6.0% dividend payable from IPO, 2/3 cash covered on day one, progressive thereafter||Progressive dividend targeting 4p a share, in detail 1pps in year 1; 2 – 3pps in year 2; progressive thereafter with target dividend rising to at least 4pps within 5 years|
|Total Return Target||10% net return||Over 9% net return|
|Performance Fees||None||12.5% over a 9%/p.a. hurdle|
|Investment into IPO – Investment manager as well as vendor of Initial Assets||£25.0m into the IPO (£5m+ from Triple Point and £20m from vendor of Initial assets)||£1.2m into IPO|
But professional or advised retail investors can access the IPO via Primary Bid
|Management Fee||Management Fee: 1% of adjusted NAV (of which 20% paid to development partner) up to
$500m, reducing to 0.9% to $1bn, and 0.8% above $1bn
|1% p.a. of the first £500 million of average market cap; 0.9% p.a. on average market cap £500 million – £1 billion; 0.8% p.a. on average market cap above £1 billion. Fees to be charged based on % capital deployed until 75% of IPO funds
committed or invested. 10% of management fees paid in shares and subject to a 12 month lock-up
|Of note||Experienced chairman: Jack Waters – over 30 years in digital infrastructure, most recently as COO at Zayo, operating 13
million miles of fibre and 45 data centres across Europe and the US, Zayo was listed on the NYSE prior to
its $14bn acquisition and take private by Digital Colony and EQT in 2019
|Cordiant issuing subscription shares: Issued on a 1-for-8 basis to IPO investors for nil consideration
Subscription right to acquire one ordinary share until February 2026 (monthly between 1 March 2021 an 31 August
2021; semi-annually in February and August thereafter)
Subscription price of 100p in the first six months; thereafter increasing by circa 9% p.a. (from IPO) less dividends paid
|Timescale||Intention to float released yesterday but other details subject to change. Prospectus is imminent in the next week or so, with full listing probably towards end of March||Prospectus issued last week. Closing offer on 12 February. Initial admission 16 February.|
|More about the manager||Triple Point is a 16 year old London based investment management firm, with an AUM of c.£1.8bn and a client base consisting of private investors, institutional investors, pensions funds and UK Government (Department of Business Energy & Industrial Strategy). They focus on essential infrastructure with long-term, stable cash flows underpinned by rigorous ESG considerations. The firm employees c.140 people and key investment themes include essential social housing, energy and infrastructure, leasing, and digital infrastructure.||A ~$2 billion AUM institutional asset manager, Cordiant is a sector-focused investor in infrastructure private
equity and private debt. Digital Infrastructure is one of four key sectors for the firm. The client base consists of large insurer, pension plans and governments in North America and Europe. Partner-owned and run, the
firm has fully registered entities in Luxembourg (AIFM), the U.S. (SEC) and Canada
Cordiant has clear expertise in this space (as does Triple Point), and I suppose Cordiants’ North American origin might give it something of a head start when it starts acquiring US assets for instance. That said, from my reading of the relevant documents, it does seem like the Triple Point offering has more concrete details about its pipeline of assets. Balanced against this is the reality that Cordiant is first off the block with D9 likely to follow over a month later.
On balance I still prefer the D9 offering, notably because it’s setting up a way via PrimaryBid for advised clients to access the IPO, whereas the Cordiant offer is pure SFM/Institutional – and I like the greater detail of the pipeline in the D9 documents I’ve seen. Presumably, come April both funds will be listed and at that point, private investors will be able to buy, though I suspect both funds will be trading a premium by then.
I’ll return to this space in an FT column in April to set the wider context.