Canadian public pension fund PSP is aiming for the skies with a US$3 billion deal alongside EQT Active Core Infrastructure to buy out the NASDAQ-listed Radius Global Infrastructure.
Radius’ operating company AP Wireless (APW) has a portfolio of real property interests and contractual rights, 67% of which is in Europe. At end-2022, Radius had interests in the revenue streams of approximately 9,188 assets that were situated on approximately 7,024 communications sites in 21 countries, supporting 39% of towercos and 61% of mobile operators.
The purchase price represents a premium of 28% over the closing price of Radius shares on February 24, and a premium of 31% to the volume-weighted average price of Radius shares over the last 90 days.
Patrick Charbonneau, Senior Managing Director and Global Head of Infrastructure Investments at PSP, said, “Radius is a strong fit with PSP’s portfolio and mandate given it has inflation-adjusted contracted income, little exposure to GDP, and substantial growth opportunities linked to demand for digital services.”
The investment brings the total direct investment in telecommunications towers by state-owned investors from 2017 to approximately US$10.5 billion, 42% of which is in Emerging Markets, 39% in Europe, 17% in Developed Asia and 3% in North America. Emerging markets are targeted due to the fast pace of growth in EM digital economy, particularly in India and Southeast Asia. However, Radius has a small EM footprint with just 15% of its portfolio located in Latin America, its only EM market.
Australia is also a major target for investment in towers by sovereign investors with another Canadian PPF, OMERS, involved in two major deals in 2022: a portfolio of more than 1,230 mobile towers from TPG and independent Australian developer, owner and operator of mobile tower assets Stilmark.
Singapore’s sovereign investor GIC is the biggest single sovereign investor in the sector, representing 27% of the total over the period, but together Canadian public pension funds contributed more than half.
Investment data covers direct acquisitions originated by sovereign investors, often alongside other institutional investors. The less active and staffed pension funds from North America and Europe sought exposure to the industry via external managers, committing large sums of capital to generic funds run by managers like Blackrock, Stonepeak, GIP, Macquarie, Brookfield, KKR or ISQ.
Growth in towers is likely to be sustained by the rollout of 5G networks. Radius can facilitate this growth through its role in site acquisition and leasing to TowerCos, an increasing number of which are independent of mobile network operators.