IMCO Invests in European Bandwidth

The Investment Management Corporation of Ontario ("IMCO") and Stonepeak Infrastructure Partners announced a deal providing euNetworks €250 million of growth capital:
euNetworks Group Limited (“euNetworks”), a Western European bandwidth infrastructure company, today announced that it has secured an additional €250 million of capital from the Investment Management Corporation of Ontario (“IMCO”), an investor since 2018, alongside a new commitment from a vehicle managed by Stonepeak Infrastructure Partners. Pro forma for the capital raise, Stonepeak will continue to own a majority stake in euNetworks. The equity commitment will be allocated to fund further organic growth, M&A and other general corporate purposes.

euNetworks is focused on delivering high bandwidth data centre to data centre connectivity between and within cities in Europe. The company owns and operates deep fibre networks in 17 cities and also operates a highly differentiated long haul network that spans 15 countries. euNetworks continues to invest in its network, building unique routes, adding multiple diverse paths and extending reach into key hyperscale data centre sites, data centre clusters and network aggregation points. These investments continue to fuel the company’s growth and are driven by the capacity requirements of euNetworks’ customers.

“Bandwidth and Internet Infrastructure underpins much of commerce and society and that impact continues to grow exponentially,” said Brady Rafuse, Chief Executive Officer of euNetworks. “We are laser focused on deploying capital to support the requirements of our customers, whose bandwidth requirements typically double every year. We are delighted to have secured additional investment from IMCO and Stonepeak and thank them for their support as we continue to build and deploy fibre network infrastructure in Europe.”

“When we made our initial investment, we recognised that euNetworks had distinguished itself in an increasingly connected society where certain backbone fibre networks underpin the digital infrastructure ecosystem, said Brian McMullen, Senior Managing Director of Stonepeak. “That remains the case today, and the team continue to do an exceptional job, delivering critical network infrastructure to euNetworks customers. There continues to be no shortage of compelling capital opportunities in Europe and we remain committed to building further on the unique position of euNetworks.”

“We seek to invest in world class infrastructure businesses globally and are excited to be supporting one with our investment in euNetworks as they continue growth of their European platform,” said Tim Formuziewich, Managing Director and Global Head of IMCO’s Infrastructure program. “We see bandwidth demand growth being extremely differentiated to other value drivers of infrastructure assets that offers diversification to our clients’ portfolios. That growth profile combined with euNetworks’ leading position in the European bandwidth infrastructure market and track record of successful capital deployment presented a strong investment opportunity for IMCO.”

In recent years, euNetworks has added new metro networks in Manchester, Milan, Madrid and Vienna, connecting all key data centres, as well as additional density and extensions to many of its existing city networks. The company has also extended its long haul network, adding unique routes, deploying new fibre on existing routes and in late 2019, completed the build out of critical Internet infrastructure linking Dublin to London and Lowestoft. This new Super Highway includes the first new subsea cable system in the North Irish sea for some years (Rockabill), and the entire route was built with new ultra low loss fibre to deliver the lowest cost per bit.

About euNetworks

euNetworks ( is a Western European provider of bandwidth infrastructure services. We focus on delivering scalable, fibre based products and solutions to a customer base that is at the centre of technology transformation. Our customers require fibre based data centre to data centre connectivity, both within the key cities in Europe and between these cities, supporting both their bandwidth growth and the performance requirements that their applications demand. Our customers’ needs shape how we develop our network further. We own and operate 17 dense fibre based metropolitan city networks. These are connected with an intercity backbone covering 51 cities in 15 countries. Our metro networks are in London, Manchester, Dublin, Amsterdam, Rotterdam, Utrecht, Paris, Frankfurt, Cologne, Dusseldorf, Stuttgart, Munich, Hamburg, Berlin, Vienna, Milan & Madrid. euNetworks leads the market in data centre connectivity, directly connecting over 430 in Europe today, with further data centres indirectly connected. We are also a leading cloud connectivity provider, direct connection to all key cloud platforms and access to additional platforms. Our product set of Fibre, Wavelengths and Ethernet is bundled to deliver bandwidth solutions for our customers, from euTrade to Cloud Connect, DC Connect, and Media Connec


The Investment Management Corporation of Ontario manages $70.3 billion of assets on behalf of its clients. IMCO’s mandate is to provide broader public sector institutions with investment management services, including portfolio construction advice, better access to a diverse range of asset classes and sophisticated risk management capabilities. IMCO is an independent organization, operating at arm’s length from government and guided by a highly experienced and professional Board of Directors. Follow us on LinkedIn and Twitter @imcoinvest

About Stonepeak Infrastructure Partners

Stonepeak Infrastructure Partners ( is an infrastructure-focused private equity firm headquartered in New York that manages $18.2 billion of assets for its investors (as of December 31, 2019). Stonepeak invests in long-lived, hard-asset businesses and projects that provide essential services to customers, and seeks to actively partner with high-quality management teams, facilitate operational improvements, and provide capital for growth initiatives.
So, euNetworks secured an additional €250 million of capital from IMCO and its infrastructure partner, Stonepeak Partners.

As stated in the press release, euNetworks is focused on delivering high bandwidth data center to data center connectivity between and within cities in Europe. It needs this "growth capital" to expand its operations across Europe.

IMCO is basically co-investing alongside Stonepeak which owns a majority stake in euNetworks.

Why doesn't Stonepeak just go get a loan at a European bank to expand the operations of euNetworks? Because the terms of the deal would be onerous and in IMCO, Stonepeak has a trusted partner with long-term stable capital (banks don't typically finance loans more than three years).

What does IMCO get? A slice of the European bandwidth market which is a stable play in infrastructure.

Keep in mind, the COVID-19 pandemic has wreaked havoc on certain segments of infrastructure.

In particular, the pandemic and forced government lockdowns have hurt transportation assets like airports, ports and toll roads.

The more defensive plays are infrastructure assets like electric grids, renewable energy, data centers, cell towers and fiber/ bandwidth connectivity.

In fact, you can argue the pandemic and any future pandemic is bullish for logistic properties, data centers, cell towers and bandwidth connectivity.

On top of that, if working remotely becomes the norm, bandwidth connectivity will lay the foundations for this revolution. It's also a play on the rise of e-commerce, a secular trend pensions love to invest in.

Lastly, I think it's worth reading the insights Tim Formuziewich, IMCO’s Managing Director of Infrastructure, laid out on building beyond the pandemic:
How are you thinking about infrastructure as the year unfolds? Where do you see the opportunities for this asset class?

There’s no question that investor appetite for infrastructure remains strong. We’ve got up to a $10-billion allocation to this asset class and we are well underway in deploying this capital. We’re being prudent, methodical and responsible, and are doing this both directly and through funds.

Our strategy is global, and we’re seeing a lot of activity across the asset class. When assets are fully valued, there are many willing sellers and that has been the case for the last two years, especially in North America and Europe. There are significant amounts of capital chasing deals in those markets, which has driven this trend.

What we’re trying to do right now is two-fold. First, we’ve been looking at our existing portfolio to determine which assets we’d like to keep and own more of, and which ones we’d like to sell. And then second, we’re looking at assets that offer clients improved diversification, opportunities that are strategic in nature for IMCO and, given the current market environment, value-oriented opportunities.

Wherever you look in the private markets, there’s talk of significant amounts of “dry powder” capital – money that large institutions are waiting to deploy. Does that make infrastructure investing more challenging for IMCO?

There certainly is a lot of dry powder in the infrastructure world, but generally I would describe most of the market as appropriately pricing risk. It’s forcing everyone to be more disciplined, and that’s really where we excel. We believe there’s still good value to be found among the largest transactions in the world, as well as select regions in the world such as Latin America, pockets of Europe and a number of emerging markets. The pandemic has created challenges for some sectors that ultimately translates into potential investment opportunities at valuations that were not available a few months ago.

What’s guiding your investment decisions in this sort of environment? Are there sectors or industries you’re focused on?

We are trying to deliver absolute returns to our clients and offer portfolio diversity in doing so. Our portfolio view does not change from a fully valued environment to a dislocated environment.

In terms of sectors, we’ve been generally cautious on transportation assets over the last year, as we have been on the back end of a long bull run. We think other private investors view the world in a similar way. This cooling off could end up translating into some interesting transport opportunities in the next year or two.

There is also significant opportunity in what I’d call defensive or neutral transactions. This includes technology – fibre buildouts, data centres, cell towers and so on. We believe that investment is going to happen regardless of whether or not the economy is going to grow or flatten over the next couple of years.

We’re also looking closely at renewable energy. We believe the transition to renewables or low-carbon energy will be much faster than what some anticipate.

IMCO has a long-term investment horizon. When you look ahead five or 10 years out, what do you think will be your areas of focus thematically speaking?

I think again that the change in the power and energy industry will be a big theme. My view is that any systemic alpha in renewable development is gone, with the exception of select opportunities in developed markets and certain emerging markets. At the same time, the influx of intermittent renewable energy assets such as wind and solar have created system stability challenges that regulators have begun to address. We’re spending a lot of time studying what an energy business will have to look like to be successful in five or 10 years.

Next is the unfolding telecommunications buildout. In our view, the fiber buildout in particular is happening now in scale and potentially will only be required once. In 10 years, we’d like to look back and see a portfolio that has thoughtfully and constructively invested in the space.

And the third theme would be greater exposure to greenfield development. The current dislocation will not last and when markets revalue, the option to invest at cost as opposed to multiples of cash flow would be extremely valuable to our clients.
As you can read, he outlines clearly why they are focused on defensive infrastructure and why they want to continue investing in the telecommunications and fiber buildout.

There's a lot of politics in building out Canada's 5G network, so maybe Europe is the place to focus on right now:

But I'm sure the US will have a say there too. This Huawei 5G rollout is the new battleground for US-China relations and it's going to get very ugly and involve a lot of countries.

Below, an older (2011) interview with euNetworks' CEO Brady Rafuse. Very impressive company and he explains what they do very clearly even if it is an old interview. IMCO is very lucky to have partners that gives them access to these infrastructure assets, great long-term investment.