Aqua Comms, a Dublin-headquartered company that operates a sub-sea transatlantic fibre-optic cable that link the US to Europe via the Republic, is to be acquired in a $215 million (€181m) deal.
A newly-formed investment trust, Digital 9 Infrastructure, intends to buy the company after listing its shares later this week as part of a £400 million initial public offering (IPO) in London.
Aqua builds undersea cables and sells capacity on them to telecoms companies, which in turn provide services to their clients, usually multinational tech companies.
The company is the owner and operator of two transatlantic cables: America Europe Connect-1 (AEC-1) and America Europe Connect-2 (AEC-2) cables.
AEC-1 is 5,521km and links Long Island in New York to Killala, Co Mayo. It was readied for service in 2016 after a $300 million investment.
AEC-2 is 7,650km and directly links New Jersey with Denmark with a yet-to-be constructed branch in the Republic. It launched last December. The cable is expected to make land at Old Head, also in Co Mayo, in the autumn, although it is still at the foreshore licensing application stage.
Aqua also owns and operates CC-1, a 131km sub-sea cable system connecting Dublin and Anglesey in Wales, and is progressing with a second network (CC-2) between the Irish capital and Blackpool.
The deal for Aqua is conditional on the flotation, with Triple Point Investment Management, an investment group that has more than £1.8 billion of capital under management set, to oversee the new trust.
Digital 9 said in its prospectus it will pay $215 million for Aqua on a cash-free, debt-free basis.
The Dublin-headquartered company, which will be the trust’s first acquisition, will make up about 30 per cent of its’s gross asset value after the IPO. It also intends to invest in other digital infrastructure assets, including data centres, terrestrial fibre, tower infrastructure and small cell networks.
The trust has also secured right of first refusal for a $3billion pipeline of opportunities from Aqua Comms developer Aqua Ventures.
In total Aqua owns and operates 14,300km of transatlantic sub-sea fibre systems, which make up the “backbone of the internet”, according to the offer document.
Some 98 per cent of international internet traffic is currently transported via such cable systems, of which there are more than 400 currently active globally with another 60 planned over the next three years.
The company reported total revenues of $30.2 million last year, as against $18.6 million in 2019. It also recorded earnings before interest, taxes, depreciation, and amortisation (ebitda) of $18.6 million versus $16.5 million a year earlier.
The deal for Aqua comes as it has just announced it has finished upgrading its network in a move that doubles capacity on its transatlantic cables to almost 20 terabits per second (TB/s).
The deadline for applications for Digital 9 shares under the IPO is 11am on Thursday, with shares set to trade on the London Stock Exchange on Wednesday, March 31st. Arthur Cox is adviser to Aqua on the deal.
"From day one Digital 9 will deliver returns underpinned by 20 year plus contracted revenue from some of the largest companies in the world, including Facebook, Apple, Amazon, Netflix, Google and Microsoft, " said James Cranmer, managing partner of Triple Point Investment Management.
“The pandemic has only accelerated the fundamental transition to a digital economy whose growth was already unstoppable.”