Digital 9 Infrastructure launches strategic review following £456m Verne Global sale

In a stock exchange notice on Monday (27 November), the board said it had entered a definitive agreement for its stake in the Icelandic data centre company to private equity firm Ardian for around £349m in cash and £20m in a deferred consideration payment. 

The deal also includes a potential earn-out payment of up to £107m, which will be paid if Verne Global meets its run-rate EBITDA targets for the financial year ending December 2026.

Digital 9 Infrastructure weighs divestment from crown jewel Verne Global

DGI9 said the closing of the sale enables the trust to deleverage its balance sheet by paying down approximately £300m of its revolving credit facility. 

Following the closing of the sale, the board said in a separate stock exchange notice that it had decided to initiate a strategic review to “develop and assess the options for the company’s portfolio companies with a view to maximising shareholder value going forward”.

The review may include further portfolio sales, and will also look into the management arrangements, including performance and the fee structure, of its investment manager, Triple Point Investment Management.

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DGI9 chair Phil Jordan said: “The board has sought to maximise shareholder value from the Company’s ownership and development of Verne Global and in doing so, help to strengthen D9’s financial position and cash resources. 

“Having reached this milestone, the board will maintain oversight of D9’s portfolio and together with our advisers, engage with D9’s portfolio companies in conducting the strategic review.”

The move follows earlier calls for an independent strategic review by shareholder Aqua Ventures in late October, which the board refused. 

In today’s statement, the board said it believed that initiating a strategic review prior to signing a deal for Verne Global could have “undermined” the process to maximise shareholder value “without directly helping to address the company’s financial uncertainty”.

Board recomposition

Digital 9 Infrastructure has also said it intends to review the skills and composition of the board by appointing a recruitment consultant to conduct an independent external recruitment process to identify new non-executive directors.

The targeted candidates will have executive corporate finance and M&A credentials, as well as other skills that may be required to support the outcomes of the strategic review, it said.

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Goldman Sachs International is acting as lead financial adviser, JP Morgan Cazenove is acting as financial adviser, and Allen & Overy is acting as legal adviser in relation to the strategic review.

Pietro Nicholls, portfolio manager at RM Funds, which holds a £15m stake in DGI9, has welcomed the terms achieved for the sale of Verne Global, noting that the initial sale price is in line with the trust’s September 23 guidance.

He also welcomed the addition of a deferred consideration and potential earn-out, but argued that additional detail on the earn-out would be helpful.

“This will provide a degree of comfort to stakeholders, including shareholders, lenders, board and auditor re the ‘going concern’ risk, noted in the Sept 23 RNS, with the majority of the RCF to be repaid,” he said. 

“Reducing leverage in a higher interest rate environment is welcome from a shareholder perspective.”

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The search for new non-executive directors was also welcomed, which he said was an indication of “the future direction of the company”, and noted the initiation of the strategic review “makes sense”.

“We would not be surprised to see AcqaComms put up for sale in early 2024, potentially alongside an integrated EMIC-1/SeaEdge and Elio Networks proposition,” he added.