Henri Piganeau - Cube Infrastucture Investment

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Transform Digital Conference 08-05-2014
broadband, technology, fibre, digital

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Henri Piganeau - Cube Infrastucture Investment

  1. 1. Henri Piganeau Cube Infrastructure Fund NGN Funding Attracting Infrastructure Funds dry powder May 2014 Transform Digital INCA Conference
  2. 2. 2 Cube Infrastructure Fund – snapshot 1) Source: Preqin, September 2013 2) Source: Ventura, March 2012 13 investments across 3 industrial platforms and a diversified portfolio of power generation assets Communication Infrastructure Fiber Optics, Local Loops, Telecom Submarine Cable Public Transport Ferries & Bus, Railways & Bus Power Generation Cogeneration & Biomass, Waste to Energy, Photovoltaic, hydro and Wind energy D EVEL O PME N T Energy Supply District Heating, Energy Services 2 leading public transport operators in Sweden and Finland subject to transaction closing 2019 to 2022Term Natixis Environnement & Infrastructures Luxembourg; Team of 24 professionals with proven industrial, managerial and cross-border investment experience Manager Focus Regulated brownfield infrastructure in the E.U. Sectors : transport, energy, environment and communication infrastructure Long term predictable cash flows offering solid growth potential, preferably in the middle-market 60% of cash flows in Euros Currently 13 investments completed and 3 investment platforms created Investments Current commitments at €1.2 billion 23 investors: 2/3 France – Europe, 1/3 North America Fund Size Cube Infrastructure Fund Cube’s portfolio
  3. 3. Communication Infrastructure Platform Current and prospective geographic presence Local Networks Backbone New tenders 2013 – 2014 Consolidation targets BalaLink OranLink EulaLink Revenues: € 54m Employees: 150 10,000 km of fiber network Key Figures (consolidated)Key investment considerations •Long term contracts with local authorities and high barrier at entry to build and operate networks in semi-dense areas •Strong growth potential driven by the need for superfast symetric broadband from both enterprises and general public Outlook •Capitalize on its unlevered structure and on the significant pipeline of tenders coming to the market, to increase further its long-term growth prospects and diversify its contract base •Pursue opportunistic acquisitions and partnerships Key investment considerations •Strong cash flows backed by long-term contracts with major telecom providers in a fast growing market •Value creation through profitable development: CanaLink (2011), OranLink (2011) Outlook •Stay alert to the current trends towards consolidation in the European telecom landscape •Pursue additional development opportunities : OrVal cable between Oran and Valencia, EulaLink to connect Latin America to the Iberian Peninsula 3 Cube’s investments in communication infrastructure
  4. 4. 4 Infrastructure Funds in Europe - general overview Typology  Specialized Private Equity Funds that concentrate on financing infrastructure companies Despite its qualities (anti-cyclical nature, etc.), communication infrastructure might not always be perceived as infrastructure to infrastructure investors… Despite its qualities (anti-cyclical nature, etc.), communication infrastructure might not always be perceived as infrastructure to infrastructure investors… Available funds An untapped potential for Telco  Dry powder has been largely growing from 2003 on  Current dry powder in EU: ca. € 25 billion1)  Telco sector attracted only 6% of investment in infrastructure in 2005-112) 0% 5% 10% 15% 20% 25% 30% 35% Oil & Gas Transport Power Renewable Energy Mining Social & Defense Telecom Waste & Water 1) Source: Preqin, September 2013 2) Source: Ventura, March 2012 1.7 6 7.9 15.9 22.6 19.7 17.9 20.7 31.7 24.1 31.8 0 5 10 15 20 25 30 35 déc.-03 déc.-04 déc.-05 déc.-06 déc.-07 déc.-08 déc.-09 déc.-10 déc.-11 déc.-12 sept.-13 Dry powder Europe $ bn
  5. 5. 5 Where has their money gone to date? Examples Set of common characteristics  Open Access Networks, i.e. underlying infrastructure is separated from services procurement  Mostly, enjoying a monopolistic or duopolistic position  With a developed asset base  And for some, existing revenues (including cable that would migrate to FttH) Infrastructure funds strive to limit the commercial risk when investing in NGN assetsInfrastructure funds strive to limit the commercial risk when investing in NGN assets Fund Investment Date 200x 2008 2009 2011 2011 2011 2012 2013 2013 RIP
  6. 6. 6 Attracting Infrastructure Funds: Addressing the risks Technological risk Several risks are associated to Communication Infrastructure projects; main one is the commercial risk Commercial risk Distribution Regulatory risk  [1] Open Access Networks with a monopolistic position  [2] Commitment from RSPs to use the network  [3] Long term contracts with RSPs or local authorities  [4] Availability payments or guarantee from local authorities  [5] Extinction of copper (copper removed once roll out is completed)  [6] Migration from copper (ownership of both copper and fiber network – extinction of copper afterwards) [1] [1] [4][3] MitigantRisk Cartography Construction risk Financing risk Market adoption Network competition Regulatory risk Network competition Network competition Distribution Market adoption Technological risk Financing risk Commercial risk Commercial risk Financing risk Commercial risk Financing risk Commercial risk Financing riskFinancing risk Network competition Distribution Market adoption [6] [6] [6] [6][5] [5] [5] [5] [5] [2]
  7. 7. 6 Attracting Infrastructure Funds: Addressing the risks Technological risk Several risks are associated to Communication Infrastructure projects; main one is the commercial risk Commercial risk Distribution Regulatory risk  [1] Open Access Networks with a monopolistic position  [2] Commitment from RSPs to use the network  [3] Long term contracts with RSPs or local authorities  [4] Availability payments or guarantee from local authorities  [5] Extinction of copper (copper removed once roll out is completed)  [6] Migration from copper (ownership of both copper and fiber network – extinction of copper afterwards) [1] [1] [4][3] MitigantRisk Cartography Construction risk Financing risk Market adoption Network competition Regulatory risk Network competition Network competition Distribution Market adoption Technological risk Financing risk Commercial risk Commercial risk Financing risk Commercial risk Financing risk Commercial risk Financing riskFinancing risk Network competition Distribution Market adoption [6] [6] [6] [6][5] [5] [5] [5] [5] [2]

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