BrazilThe M&A advisors that led Vodafone's Vantage Towers IPO
Vodafone has successfully listed its Germany-based infrastructure asset subsidiary Vantage Towers on the Frankfurt Stock Exchange – raising over €2 billion in the initial public offering (IPO). A host of financial, management and legal firms were involved in the transaction.
BoFA Securities (previously Bank of America Merill Lynch), Morgan Stanley and UBS were Joint Global Coordinators for the deal, while Barclays, Berenberg, BNP Paribas, Deutsche Bank, Goldman Sachs and Jefferies were involved in underwriting the transaction. Telecom-focused consulting firm Analysys Mason brought its strategic and industry expertise to the IPO.
Some background: Vantage Towers is a Vodafone subsidiary created in 2019 to house the telecom giant’s 80,000 plus European network towers in a separate entity – a nod to the value of telecom infrastructure assets amid the imminent 5G paradigm and future network technologies.
A report from industry body GSMA estimates that towers and other telecom assets could draw nearly $900 billion between 2020 and 2025; and according to a Boston Consulting Group report from earlier this year, Europe needs to invest €300 billion in telecom infrastructure to reach 5G potential.
Vantage Tower’s listing on the Frankfurt Stock Exchange is the first step in what will likely be a long story of monetizing Vodafone’s assets. And the Dusseldorf-headquartered firm’s IPO debut suggests this strategy will be lucrative.
IPO story
Demand for Vantage Tower stock outstripped the initial 95.8 million share issue, pushing Vodafone to consider a greenshoe option – where extra shares are issued to control pricing in a case of surplus demand.
A conservative share price of €24 saw a near 5% jump on the first day of trading, valuing Vantage Towers at over €12 billion. If a greenshoe option is taken up, Vodafone could retain roughly 81% of the company while earning up to €2.3 billion on the deal – the largest listing in Germany since Knorr Bremse in 2018.
€950 million of this came from infrastructure investment firm Digital Colony and Singapore-based equity fund RRJ – as part of a pre-listing agreement. According to Vodafone CEO Nick Read, the total sum raised will be used to pay off the telco’s debt – estimated at €69 billion by Reuters.
“Eighteen months ago, we started the carve out of Vantage Towers as part of our strategy to improve returns on our assets. We have moved at pace and today’s successful IPO is the culmination of all that hard work,” he said.
According to Vantage Towers chief executive Vivek Badrinath, the strengthened balance sheet opens up myriad possibilities in a rapidly digitalizing commercial landscape. “There is a lot of interest from cell phone operators and other companies, e.g. from the Internet of Things sector, to talk to us in the next few months,” he told Reuters.
