CPP Investments and ADIA Join in on TIM Spin-Off Investment
Posted on 03/08/2024
Canada Pension Plan Investment Board (CPP Investments) entered into an agreement to join the Optics BidCo investor group, which is acquiring NetCo – the most extensive telecoms network in Italy – from Telecom Italia S.p.A.
CPP Investments has committed to acquire a 17.5% interest in NetCo for up to €2.0 billion (C$2.9 billion), as part of a transaction which values the business at an enterprise value of approximately €18.8 billion (C$27.5 billion). The investor group, led by Kohlberg Kravis Roberts & Co. L.P. (KKR), includes a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) called Azure Vista, the Italian infrastructure fund F2i, and the Ministry of Economy and Finance of the Italian Government. F2i confirmed plans to invest €1 billion in Telecom Italia (TIM)’s NetCo, for a 10% in the newly spun-off business. The deal has been supported by Giorgia Meloni’s Italian government since 2022, which plans to take a 20% stake. ADIA joined the deal in November 2023.
The Italian government approved Telecom Italia’s (TIM) planned sale of its fixed line network to KKR in January 2024. The newly defined NetCo business will be primarily comprised of the fixed network assets being separated out from Telecom Italia S.p.A., offering connectivity to homes and businesses across the country on an open-access wholesale basis with a mix of copper and fiber-based technologies.
“NetCo will provide critical end-to-end data connectivity services that support the functioning of the Italian economy,” said James Bryce, Managing Director, Global Head of Infrastructure, CPP Investments said in a press release. “Our investment alongside these key partners with a shared long-term vision will help deliver high-quality digital infrastructure across Italy as well as generating long-term risk-adjusted returns for the fund. We are optimistic that NetCo can represent the first of several infrastructure investments in Italy for CPP Investments.”
The investor group at NetCo will support the completion of an extensive upgrade to the existing network to deliver high quality and high capacity fiber-based services in urban and rural areas, decommissioning of legacy copper technologies, making improvements to IT functionality, and driving efficiencies in the business. The closing of the transaction is expected in the summer of 2024 subject to customary conditions.
The deal faced a legal challenge from a large investor in TIM – French media group Vivendi. Vivendi owns a 24% stake in TIM.