The sale at a knockdown price is the latest of Digital 9 Infrastructure’s divestments but also bolsters EXA’s transatlantic routes
Digital 9 Infrastructure has entered into a definitive agreement to divest its subsea fibre business Aqua Comms to EXA Infrastructure, the portfolio company managed by I Squared Capital, for net proceeds of approximately $48 million. The sale price reflects a 28% discount to Aqua Comms’ $75 million valuation as of 30 June 2024, and a 36% discount post-transaction costs. And, unlike data centre valuations, marks a large decrease from the $283 million valuation reported on 31 December 2023.
The company put this down to a range of issues including the inability to fund growth projects in Asia and ongoing price compression in the global subsea fibre market. The latter is certainly a signal that further consolidation will be inevitable. The planned transaction is expected to complete in approximately 12 months, subject to customary closing conditions.
The divestiture follows the recent sale of the EMIC-1 subsea cable – with completion expected by March 2025 – and is part of Digital 9 Infrastructure’s managed wind-down strategy. That cable was sold at a 15% discount to its most recent valuation of $49.6m at at 30 June 2024. That project was impacted by ongoing war in the Red Sea area, which Digital 9 has said led to an indefinite delay to its final construction completion.
Aqua Comms is an Ireland-based service provider specialising in operating submarine cable systems and supplying fibre pairs, spectrum and wholesale network capacity to the global content, cloud, carrier & enterprise markets. It is the owner/operator of America Europe Connect-1 (AEC-1), America Europe Connect-2 (AEC-2), CeltixConnect-1 (CC-1) and CeltixConnect-2 (CC-2) and is part of a consortium that owns/operates the Amitié cable system (AEC-3).
New owner EXA Infrastructure operates over 150,000km of digital infrastructure across 37 countries, including 20 cable landing stations. “The acquisition of Aqua Comms demonstrates EXA Infrastructure’s commitment to build a modern and diverse Transatlantic platform to fully serve AI, cloud and content demand, now and in the future. The combination will offer our customers more routes, more capacity and increased diversity, all on a scaled platform” said EXA Infrastructure chief executive Jim Fagan.
Akur Capital and RBC Capital Markets are acting as financial advisors to EXA Infrastructure in connection with the transaction and Paul, Weiss, Rifkind, Wharton & Garrison is serving as legal M&A advisor to EXA Infrastructure. Goldman Sachs is acting as financial advisor to D9 in connection with the transaction and Shoosmiths is serving as legal advisor to D9.