We advised a leading European investment manager in the acquisition of a stake in a major Benelux digital infrastructure provider, operating a range of fibre-optic networks and data centres.
A stake in data centre infrastructure and fibre offering, including an established B2B network with potential dark fibre services spare capacity, provides investors with access to a large, digital infrastructure operator providing connectivity solutions to telecom and enterprise customers.
The buyside client appointed Arup to provide transaction advice for the purchase of a minority stake in the firm, including a range of due diligence audits including technical, operational as well as Environmental Health & Safety assessments.
To assess the investment opportunity, Arup brought together a team of specialists from across Europe, combining rigorous economic insights with technical expertise. Aligning experts including economists and regulatory experts, data centre designers, risk and resilience managers as well as operational performance specialists, the team helped the client to evaluate these complex assets.
Technical due diligence: integrated approach to assess complex assets
With assets across four countries, the digital service provider operates in a relatively complex environment. The company’s B2B connectivity services can be supported by different fibre products, each with differing levels of service complexity and degrees of market competition, including dark fibre, wavelength division multiplexing (WDM), ethernet and internet and managed services.
On the Data Centre and Cloud Services front, the infrastructure supports a variety of services including Data Centre Colocation, also known as ‘carrier hotels’ providing equipment, space and bandwidth for rental; as well as consumer-facing cloud services like Infrastructure as a Service (IAAS) and Platform as a Service (PAAS).
Our team took an integrated, iterative approach to evaluate all the assets and provide a useful report across the different business areas in less than six weeks. Our combined approach allowed the client to consider the potential risk areas and overall transaction structure to arrive at a fair valuation.
Arup’s multidisciplinary team is uniquely placed to advise investors on complex asset investments: our technical, operational and EHS due diligence provides a thorough 360° audit that helps clients develop a financial and operational strategy to make a sound investment ” Hatice Cigdem Demirel Senior Consultant | Business Investor Advisory
On the active equipment lifecycle front, we assessed the condition, capacity, operation and maintenance regime of both the fibre network and data centres. Our team assessed the opportunities and challenges presented by potential 5G backhaul demand, where the best network infrastructure will future-proof providers against rising bandwidth demand.
On the Data Centre and Cloud Services front, the infrastructure supports a variety of services including Data Centre Colocation, also known as ‘carrier hotels’ providing equipment, space and bandwidth for rental; as well as consumer-facing cloud services.
Our engineering DNA allows us to bring a critical view on capex/opex, with the ability to understand every component involved in fibre operations and deployment. ” Julio Puschel Associate Director | Business Investor Advisory
Operational due diligence: unlocking further value
The team carried out an IT infrastructure review, mapping out both the operations and business support systems (OSS/BSS) and looking at the network maintenance operations. Our team also assessed the commercial aspects of the deal, including existing contracts like SLAs, interconnection and termination agreements; as well as evaluating the overall operating model and organisation including the capital expansion and upgrade programmes, strategic project cost assessment, procurement risks as well as capex and opex validation and future growth assessments.
Once those phases were complete, the team carried out the Environmental, Health & Safety audit, including a review of Health & Safety and environmental performance and procedures, evaluating the EHS reporting including carbon and efficiency, and providing an overview of relevant certification and compliance records.