OMERS Acquires Australian Tower Company Stilmark
OMERS Infrastructure announces agreement to acquire mobile tower company Stilmark
Fourth global investment for OMERS Infrastructure in digital infrastructure
OMERS Infrastructure today announced that OMERS has signed an agreement to acquire Stilmark, an independent Australian developer, owner and operator of mobile tower assets. The transaction will be OMERS second tower investment in Australia in two months, following the announcement on 9 May that it signed an agreement to acquire 100% of TPG Telecom Limited’s mobile tower and rooftop portfolio. The details of this transaction are not being disclosed.
Christopher Curtain, Senior Managing Director, Asia-Pacific for OMERS Infrastructure, said: “We have developed a strong relationship with and respect for the Stilmark management team and their capabilities. The strong focus on delivering innovative and market leading solutions for mobile network operators continues to be a key part of our interest in the company. Stilmark is an excellent fit for our new Australian digital infrastructure portfolio, as it complements our recent investment in TPG’s mobile tower and rooftop portfolio.”
Since its establishment in 2013, Stilmark has delivered numerous development and build projects for TPG and Optus, and has grown a national portfolio and pipeline of towers, with all sites secured under long-term revenue agreements. Stilmark is currently owned by its founders, management team, family offices and US-based ATN International.
Commenting on the sale, Stilmark Chairman, Graham Bradley, said: “We are delighted that our business will be joining the OMERS Infrastructure portfolio in Australia and are excited about the opportunities this creates for our team to continue our innovation leadership in the tower market.”
Christopher added: “OMERS Infrastructure is an active asset manager, seeking to grow OMERS investments across Asia-Pacific organically and through accretive acquisitions. Today’s announcement follows the news we shared last week, of an additional investment in our India road platform, IndInfravit, to facilitate its acquisition of 5 additional roads across the country. We are proud of our activity across Asia-Pacific to support and grow our portfolio in key sectors including digital infrastructure, mobility and the energy transition.”
Once the Stilmark and TPG tower asset transactions close, the consolidated towers business will be part of OMERS Infrastructure’s growing portfolio of assets in Australia, alongside Port of Melbourne, Transgrid and renewable energy firm FRV Australia. It will also be part of OMERS Infrastructure’s global portfolio of digital infrastructure assets, alongside Deutsche Glasfaser/inexio in Germany, and XP Fibre in France.
OMERS Infrastructure was advised by RBC Capital Markets, Corrs Chambers Westgarth, PricewaterhouseCoopers, Grex Consulting and Alvarez & Marsal. Stilmark was advised by Q Advisors LLC, Kain Lawyers and KPMG. The closing of the transaction is expected in Q3 2022, subject to customary regulatory approvals.
-----The announcement of the transaction with TPG Telecom Limited is here: https://www.omersinfrastructure.com/news/omers-infrastructure-announces-agreement-to-acquire-its-first-asia-pacific/
About OMERS Infrastructure
OMERS Infrastructure manages investments globally in infrastructure on behalf of OMERS, a defined benefit pension plan for municipal employees in the Province of Ontario, Canada, and third-party investors through its Strategic Partnership Program. OMERS Infrastructure currently has approximately C$32 billion in assets under management and over 30 investments, principally in North America, Europe and Asia-Pacific and across sectors including energy, digital services, transportation and government-regulated services. OMERS Infrastructure has employees in Toronto, New York, the U.K., Continental Europe (including Amsterdam, NL), Asia and Australia. More information: www.omersinfrastructure.com
Let me begin by thanking Neil Hrab for bringing this deal to my attention earlier today.
Back in May, I discussed how OMERS Infrastructure acquired 100% of TPG Telecom Limited’s mobile tower and rooftop portfolio.You can read that comment here.
At the time, I noted this:
In the press release, Christopher Curtain, Senior Managing Director, Asia-Pacific for OMERS Infrastructure, highlights the important points to note:
“Australia and Asia-Pacific more broadly are priority markets for OMERS Infrastructure, where we continue to see significant investment opportunities. We are excited to have the investment in TPG’s Tower Assets join our portfolio of high-quality Australian infrastructure investments, alongside Port of Melbourne, Transgrid and renewable energy developer FRV Australia. In the transaction, we see an excellent opportunity to realize our digital infrastructure thesis in the region. We look forward to working with the TPG team to first transition the business and then support its growth as it provides critical telecommunications infrastructure services to its customers.”Telecom towers are precisely the assets that Canada's large pensions love investing in because they're regulated and provide steady cash flows over a long period.
The portfolio OMERS Infrastructure acquired consists of 428 towers and 809 rooftops, representing approximately 21% of TPG Telecom’s total mobile network footprint in Australia.
As part of the deal, TPG has agreed to an initial 20-year contract to use the tower assets. TPG has also committed to building additional towers to expand the network over the coming years.
Think of it like a super long-term lease in a building except TPG will be paying OMERS Infrastructure over a 20-year period to use the tower assets.
This is why Canada's large pensions are investing more in infrastructure assets where they can get a better match to their long-dated liabilities, with an inflation adjustment (typically regulated and part of the contract).
I also discussed how Australia is reforming its digital infrastructure strategy, modernizing it for the future.
This latest deal represents OMERS' second tower investment in Australia in two months, highlighting OMERS Infrastructure's commitment to realize on its digital infrastructure thesis in the region.
The press release also states once the Stilmark and TPG tower asset transactions close, the consolidated towers business will be part of OMERS Infrastructure’s growing portfolio of assets in Australia, alongside Port of Melbourne, Transgrid and renewable energy firm FRV Australia.
It will also be part of OMERS Infrastructure’s global portfolio of digital infrastructure assets, alongside Deutsche Glasfaser/inexio in Germany, and XP Fibre in France.
Christopher Curtain, Senior Managing Director, Asia-Pacific for OMERS
Infrastructure also said: “ Stilmark is an excellent fit for our new Australian digital
infrastructure portfolio, as it complements our recent investment in
TPG’s mobile tower and rooftop portfolio.”
Stilmark is an independent Australian developer, owner and operator of mobile tower assets.
I would recommend you read more about this company here and see the highlights below:
As you can see, this company doesn't just fit well into OMERS' portfolio from an investment point of view, it also fits well from a values and responsible investment point of view.
Stilmark is currently owned by its founders, management team, family offices and US-based ATN International.
It's a company OMERS knows extremely well.
Back in November 2020, Stilmark, OMERS Infrastructure and ATN International, its strategic shareholder, announced a consortium to jointly pursue opportunities in Australian telecommunications infrastructure:
- Symphony Consortium to pursue opportunities driven by growing infrastructure demand, supporting data demand growth and 5G network rollouts
- A$116 billion Canadian pension fund OMERS provides deep funding capacity and global telecommunications and infrastructure experience
- ATN International, a leading American neutral host network operator, continues support for Stilmark as strategic investor
Stilmark, its strategic shareholder ATN International and OMERS Infrastructure today announced the formation of the Symphony Consortium (“Symphony”), a partnership to jointly pursue opportunities in Australian telecommunications infrastructure, capitalising on the rapidly growing demand for new infrastructure driven by increasing data demand and the deployment of 5G networks.
Symphony brings together one of Canada’s largest defined benefit pension plans and a prominent global infrastructure investor in OMERS with net assets of AUD$116 billion and fast growing Australian tower company Stilmark, supported by one of the largest US neutral host wireless network operators in ATN International.
Stilmark founder and CEO Steven Butler said Australian consumers would continue to benefit from the increased competition Symphony will bring to the telecommunications infrastructure market.
The consortium members are proven world leaders in establishing, owning and operating fair, transparent and long-term infrastructure partnerships with customers.” Mr Butler said.
“Since our market entry in 2016, we have been delighted to see Stilmark’s customers enjoying the significant benefits of competition in the market for critical telecommunications infrastructure. We see opportunities to continue to partner on both greenfield and in-situ assets that accelerate strategic priorities, including 5G network deployments. The addition of OMERS Infrastructure provides us with the financial power to further accelerate our growth.”
OMERS Infrastructure’s Managing Director for Australia, Christopher Curtain, said, “We are delighted to work with Stilmark and ATN International, building on our existing and growing presence in Australia following our most recent investment in TransGrid. The strong focus on delivering innovative and market leading solutions for its customers was a key part of the attraction to Stilmark. We are looking forward to exploring opportunities, and working with our highly-reputable partners to leverage the global experience OMERS brings through successful major telecommunications investments internationally in France and Germany. ”
Stilmark chairman Graham Bradley AM said Stilmark has a proven track record of leading telecommunication tower deployment in the Australian market with a highly regarded and trusted management team.
“This combined with ATN’s experience and the benefit of OMERS’ patient long-term capital, financial power and extensive Australian experience means we are well positioned to pursue opportunities that will assist Australian mobile network operators accelerate the rollout of 5G networks. This will benefit all Australians, from cities to regional areas.”
ATN International Chairman and CEO Michael Prior said the company first invested in Stilmark in 2017 and have worked closely with the Stilmark team to take advantage of a significant market opportunity in Australia.
“Through Symphony we are able to leverage our more than 15 years of experience operating one of the largest neutral host mobile networks in the US across 10 states for all major US carriers,” Mr Prior said.
The Consortium is also pleased to announce James Eisenstein, the co-Founder of American Tower Corporation, board Director of ATN International and Chairman & CEO Grupo TorreSur, and former Vodafone NZ CEO Russell Stanners as special advisors to the Consortium.
“Both James and Russell are experienced international CEOs, and join the existing group of prominent industry former executives and investors in supporting the Consortium” Mr Butler said.
In September AMP Capital announced a $130 million senior syndicated loan facility with Stilmark to support its deployment of new mobile tower infrastructure across Australia.
I'm providing you this background to explain why OMERS Infrastructure has signed an agreement to acquire Stilmark.
Details of this deal are not available but it clearly fits nicely into OMERS' infrastructure portfolio which delivered solid returns last year and over the last five years:
The only thing I can add on tower assets is they are less cyclical in nature and are more of a long-term play on the growing demand for digital information.
And just to provide you with more context, tower assets are a very hot commodity these days.
Bloomberg recently reported that KKR, Global Infrastructure Partners and Stonepeak Partners have jointly made an offer for a controlling stake in Deutsche Telekom's tower unit, which is valued at €20 billion (about $21 billion) and that Brookfield Asset Management and Spain's Cellnex Telecom have also made a joint bid for the asset.
Vodafone Group’s infrastructure subsidiary Vantage Towers is also interested in the deal and could make a bid on its own or with a
partner.
When strategic incumbents, private equity and infrastructure giants are bidding hard on tower assets, you know there's great long-term value there.
I know, this isn't the same scale as the acquisition of TPG Telecom's mobile tower and rooftop portfolio or Stilmark but it gives you a great idea of which assets top funds are going after.
Below, Philippe Camu, global co-head of the infrastructure investment group at Goldman Sachs, talks about how the next big public-works projects are more focused on fiber and data centers than traditional construction like roads and airports (filmed in June 2020).
And more about Macquarie's capabilities in developing digital infrastructure, from Macquarie Group’s 2022 Operational Briefing, highlighting their acquisition of Vocus.
As you can see, the pandemic has accelerated trends in digital infrastructure and there are no signs of it slowing down in a post-pandemic world. Every well-diversified institutional portfolio should now hold some digital infrastructure assets.
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