Consortium of AIIM, Adenia Partners and IFC acquires majority stake in Eastcastle Infrastructure

The joint acquisition will provide USD130m in funding to Eastcastle to support the company’s build-to-suit strategy in Democratic Republic of Congo, Nigeria and Côte d'Ivoire.

Jersey & Cape Town, 29 2021: African Infrastructure Investment Managers (AIIM), one of Africa’s largest infrastructure-focused private equity fund managers, Adenia Partners (Adenia), a private equity firm investing in Africa, and IFC, a member of the World Bank Group, have partnered to invest a total of USD130 million to support Eastcastle Infrastructure (Eastcastle), a company specializing in Africa’s telecoms tower sector.

Eastcastle was established in 2020 by Peter Lewis and Pankaj Kulshrestha, the former CFO and COO respectively of Eaton Towers. The funding will support Eastcastle’s build-to-suit strategy, to develop new telecom towers initially in the Democratic Republic of Congo, Nigeria and Côte d'Ivoire. The number of towers across the region needs to increase significantly to accelerate the deployment of bandwidth intensive technologies such as 3G, 4G and 5G by Mobile Network Operators and to increase quality connectivity for individuals and businesses.

The deal comes as growth in data consumption across Africa is soaring, with data consumption per subscriber expected to increase fourfold by 2025, along with an expected 200 million new mobile Internet users. Mobile operators that use bandwidth intensive technologies, such as 3G, 4G and 5G are expected to account for more than 85% of connections by 2025, compared to around 38% in 2017. The growth in smartphone adoption in Africa is another factor leading to increasing demand for data, with smartphone usage set to rise to 65% of connections in 2025, up from 44% today.[1]

Ed Stumpf, Investment Director at AIIM, commented: “Investment in Africa’s digital infrastructure is more important than ever to meet rising data demand and enable Africa’s digital economy. The internet economy has the potential to contribute nearly USD180[2] billion to Africa’s gross domestic product by 2025 and, as such, a core part of AIIM’s strategy is to invest in businesses that address digital infrastructure bottlenecks and enable efficiency through infrastructure sharing.  We look forward to working closely with the Eastcastle team, which brings vast experience in the sector and comprehensive capabilities in the development and operation of tower portfolios in multiple markets.”

Stephane Bacquaert, Managing Partner at Adenia commented: “Eastcastle meets a clear need for additional towers as operators look to extend and upgrade their networks and boost their offering, with demand notably strong in Africa. Eastcastle will play a key role in filling infrastructure gaps, by helping networks provide coverage and services both more efficiently and over a wider area. We are pleased to partner with a deeply experienced, well reputed and highly capable team to make this venture a success.”

Linda Munyengeterwa, IFC’s Regional Industry Director for Infrastructure, Middle East & Africa commented: “With almost half of the world’s population still unconnected, bridging the digital divide is a core priority for IFC. By supporting infrastructure sharing initiatives, we can help accelerate digital connectivity at a lower cost while enabling consumers to access quality services. This investment in Eastcastle is testimony to IFC’s commitment to strengthening digital infrastructure in Africa and contributing to inclusive economic growth. We are excited to join with the teams of Eastcastle, AIIM and Adenia, to work together on connecting the unconnected.”

Peter Lewis, co-Founder of Eastcastle added: “Following the success of Eaton Towers, Pankaj, myself and the team are excited by this opportunity to again be of service to our long-standing African Telecoms clients. We are especially pleased by the strong investor support received from some of the most experienced investors in African Towers and Infrastructure.”

The consortium’s advisors for the transaction were Clifford Chance (legal) and Deloitte (tax). The sponsor’s advisors were Norton Rose (legal) and Hardiman Telecommunications (Commercial). AIIM will initially have two representatives on the board of Eastcastle: Ed Stumpf and Martin Edge, senior digital infrastructure advisor for AIIM.  Adenia’s representatives will be Stephane Bacquaert and Charles Boatin.

[1]https://www.gsma.com/mobileeconomy/wp-content/uploads/2020/09/GSMA_MobileEconomy2020_SSA_Eng.pdf

[2]https://www.ifc.org/wps/wcm/connect/publications_ext_content/ifc_external_publication_site/publications_listing_page/google-e-conomy