henri piganeau - cube infrastucture investment
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Henri Piganeau
CubeInfrastructure Fund
NGN Funding Attracting Infrastructure Funds dry powder
May 2014
Transform Digital INCA Conference
2
Cube Infrastructure Fund – snapshot
1) Source: Preqin, September 20132) Source: Ventura, March 2012
13 investments across 3 industrial platforms and a diversified portfolio of power generation assets
CommunicationInfrastructure
Fiber Optics, Local Loops, Telecom Submarine Cable
PublicTransport
Ferries & Bus, Railways & Bus
Power Generation
Cogeneration & Biomass, Waste to Energy, Photovoltaic, hydro and Wind energy
D EVEL O PM EN T
EnergySupply
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 infrastructureLong term predictable cash flows offering solid growth potential, preferably in the middle-market60% of cash flows in Euros
Currently 13 investments completed and3 investment platforms created
Investments
Current commitments at €1.2 billion23 investors: 2/3 France – Europe, 1/3 North America
Fund Size
Cube Infrastructure Fund Cube’s portfolio
Communication Infrastructure Platform
Current and prospective geographic presence
Local NetworksBackboneNew tenders 2013 –
2014Consolidation
targets
BalaLinkOranLinkEulaLink
Revenues: € 54mEmployees: 15010,000 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
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 RenewableEnergy
Mining Social &Defense
Telecom Waste &Water
1) Source: Preqin, September 20132) Source: Ventura, March 2012
1.76 7.9
15.9
22.619.7 17.9
20.7
31.7
24.1
31.8
05
101520253035
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
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
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
DistributionMarket
adoption
Technological risk
Financing risk
Commercial risk
Commercial risk
Financing risk
Commercial risk
Financing risk
Commercial risk
Financing risk
Financing risk
Network competition
DistributionMarket
adoption [6]
[6]
[6]
[6][5]
[5]
[5]
[5]
[5]
[2]
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