With the increasing demand for data capacity fueled by streaming services such as Netflix, HBO and Amazon Prime, as well as the rise of remote working and the energy transition we are currently right in the middle of, Primevest remains at the forefront of shaping the digital landscape while preparing our cities for the future.
Therefore Primevest is investing in passive communication infrastructure, e.g. fiber networks, mobile communication towers and data centers. The projects are leased to selected active operators, ensuring a stable and long-term cash flow for our investors. Our investments are driven by increasing demand for digital connectivity.
Why Primevest’s Connectivity & Data (Communication Infrastructure) funds?
Resilient to the economic cycle
– Modern society increasingly depends on communication infrastructure.
Assets with a long economic life cycle
– Copper and coax cables are gradually being replaced by fiber optic cables, which is the superior cable-based communication backbone for the 21st century.
High barriers to entry
– CIF requires a high initial capital investment, and this acts as a significant impediment for potential competitors → the assets can enjoy a strong market positioning.
Long-term cash flow predictability
– As we have long-term lease agreements with network operators.
– Higher risk-profile of the active and content & services business layers mitigated by only investing in the underlying passive infrastructure.
– Upside-potential resulting from higher penetration of the network with additional services and yield compression.
Diversified end-user base reduces operator risk
– Networks used by private end-consumers and business customers.
– An open-access infrastructure reduces operator risk.
Primevest Communication Infrastructure Fund 2
In parallel, Primevest Capital Partners is at the moment raising its second Communication Infrastructure fund, with a focus on Germany, The Netherlands, Austria and Belgium to leverage on its substantial pipeline of projects with both existing and new operating partners further solidifying its commitment to innovative investment strategies.
For more information about the upcoming launch of the ‘Primevest Communication Infrastructure Fund 2’, please contact Frank Noé, Head of Capital Formation & Sustainability.
At Primevest Capital Partners we identified the need for investment in this vital infrastructure and launched our first fund in 2017. First-mover advantage allowed us to build an in-house team of industry experts and become an essential interface between investors on the one hand and municipalities and operators on the other. We help both sides to understand each other. Our knowledge of these assets enables us to optimise the return for our investors. It is an exciting place to be, unlocking the potential that these assets offer while enabling connectivity and the advancement of cities.
Our approach allows investors to access a stable asset portfolio with a low risk/return profile. Attractive returns are generated in three ways: first, direct yields from regular rental payments; second, leases include automatic year-on-year inflation (CPI) adjustments; third, capital gains are created from the enhancements we make to the assets or increased utilisation rate of the network.
Our ownership opens up these assets to multiple operators, allowing for greater consumer choice, improved usage, and higher rental levels. To reduce risk, we limit investor exposure to technology by not investing in the underlying operators, although we have developed strong relationships with many, such as T-Mobile, Vodafone and many regional telecom operators. These partnerships mean we can present ready-made solutions to municipalities as they seek to improve their connectivity.
Investment Criteria
We are selective as to the assets we invest in. All of which are focused on improving consumer and business access to fixed and mobile broadband and include:
- Fixed-line fibre infrastructure: Our investments allow for expanded capacity through the installation of high-speed fibre-optic cabling, which we lease to multiple operators
- Mobile communication and broadcasting towers: Can be shared by operators, thereby increasing usage through site pooling
- Communication nodes (data centres), where we mainly invest in the shared infrastructure needed to keep them operational
Geographically we are mainly focused on urban areas with sufficient population density and solid commercial locations which are underserved by telecommunication infrastructure in Germany, Austria, the Netherlands and Belgium. For example, Germany, Europe’s largest economy, lags many other countries when it comes to fifth-generation high-speed internet provision and it is estimated that around €80 billion is required to modernise its fixed-line fibre cabling.
For more information about Smart Cities, please visit our Smart City Nederland website (in Dutch only).
