DPI and Verod aim to treble TowerCo presence

Molten and Forward Partners to merge; PSG in two deals.

We’ve written plenty on PE Hub Europe about private equity firms’ involvement in TowerCos, the companies that run the towers used by mobile phone companies – whether that’s looking to invest in the businesses or carving them out from their mobile portfolio companies.

We’ve got a deep dive into the latest of those this morning, as we have an exclusive interview with Development Partners International and Verod Capital about their acquisition of Pan African Towers, announced this morning.

Next up we have some consolidation in the UK venture capital sector to report, before we look at two deals by PSG – one in the gym sector and the other in treasury and risk management software.

Towering up

London-headquartered private equity firm Development Partners International and Verod Capital are looking to triple the footprint of their new acquisition Pan African Towers, PE Hub Europe can reveal.

The private equity firms announced this morning that they were buying 100 percent of the Nigerian digital infrastructure company, which operates and leases towers to mobile network operators (MNOs).

A need for towers to meet Nigeria’s growing mobile phone usage and the adoption of newer mobile phone operating standards are set to aid the company’s growth, while a programme of decarbonisation will also come into play, said DPI partner Adefolarin Ogunsanya and Verod Capital principal and head of investments Daniel Adeoye.

“Ideally we want to triple our footprint over the next three-to-five years,” said Ogunsanya at DPI. “If we can do more, that would be great. And if there are opportunities to do other consolidations in the market, we’ll look into it.”

Organic growth will be the focus. Nigeria has over 220 million mobile phone subscriptions, according to the country’s Communications Commission, and the United Nations expects its population to grow from 224 million to nearly 375 million by 2050.

That PAT is, like Verod, headquartered in Lagos and predominately Nigerian-led and operated should play to its favour, said Adeoye.

“Unlike the larger TowerCos in Nigeria, PAT, as the number three player is solely focused on Nigeria. We’re going to be in a unique position where we can tell the MNOs and the regulator that we’re here, we’re on the ground, we continue to believe in this market, we now have the capital required and we want to hit the ground running.”

Check out the full interview for more on DPI and Verod’s growth plans for PAT, as well as how the move to newer mobile phone standards will boost the need for towers.

Consolidation

Global macroeconomic instability, high inflation and rising interest rates have been taking their toll on the venture capital industry and have now led to a takeover deal involving two London-based firms.

The boards of Molten Ventures and Forward Partners have agreed an all-share offer for Molten to acquire Forward Partners, which values all the share capital of the latter at around £41.4 million ($52.2 million; €47.7 million) on a fully diluted basis. That’s a price of 31.1p per share, a discount of about 7.3 percent to the end of last week and a premium of about 6.6 percent to the three month average up to the end of last week.

Due to the macro difficulties outlined above, Molten “has continued to see extended deal timelines with fundraising, exits and new investments taking longer to complete due to increased levels of due diligence”, the firm said in a statement.

Forward Partners said that those headwinds “have impacted the wider venture market, including Forward Partners, and required portfolio companies to extend cash runways rather than invest in growth due to less certainty of capital for future fundraisings being available.

“Depressed valuations in equity markets, particularly for technology companies, has meant fundraising rounds for venture companies have been negatively impacted. This backdrop has resulted in downward pressure on the valuation of Forward Partners’ portfolio.”

Are readers expecting more consolidation in private capital? Share your thoughts with me at craig.m@pei.group

Double investment

PSG has announced two investments this morning.

The firm has made an additional growth investment in Sports Alliance, with new commitments totalling $100 million.

PSG first invested in Sports Alliance in 2021 with a $65 million strategic growth investment. The business plans to use the funds to drive global expansion, according to a release.

Sports Alliance is a digital infrastructure, gym management software and gym financial services provider. The company is based in Hamburg.

PSG has also become the new reference shareholder of Diapason, a French treasury and risk management software provider for large and mid-sized companies.

Paris-based Diapason was previously majority owned by Seven2 (formerly Apax Partners). Apax Partners Development invested in Diapason in November 2020.

The transaction will enable the management team to consolidate the company’s position in France in the large and mid-market segments, according to a press statement. PSG will also help Diapason to develop its international presence, the release added.