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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.
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, added: “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.”
