Article originally posted on Inside Towers:
https://insidetowers.com/telecom-assets-hold-value-as-economy-becomes-unsettled/towers/
September 19, 2022
Even with today’s higher interest rates and inflationary environment, the market for telecom infrastructure properties remains very robust. That’s according to Pinpoint Capital Advisors, a boutique corporate finance advisory firm specializing in the wireless tower, fiber and data center sectors. Both lenders and equity providers are finding the assets extremely attractive, according to Adrian Grandilli, CFA, Associate Vice President. However, the mix of interested investors is skewing away from private equity firms and toward institutional groups.
“We’re already seeing an increased appetite from infrastructure and institutional investors who have the ability to transact at these lower returns brought on by higher borrowing costs and inflationary pressures,” said Grandilli, who has worked on a number of mergers and acquisitions (M&A) and capital raising mandates since joining Pinpoint in 2016.
Andrew Semenak, Pinpoint Managing Director and founding partner, agreed. “We’re seeing traditional private equity and other types of capital being gradually displaced by longer term, lower cost institutional financing, like infrastructure funds, pension plans and others.”
Economic turmoil has had an impact on the tower companies’ value on Wall Street, but multiples in tower transactions remain strong at above 30X tower cash flow. “The lowering of valuations in the public markets hasn’t really translated into lower transaction multiples in the deals we’re seeing in the private markets,” Semenak said. “There is a real resiliency.”
A Decade of Deals and Deep Relationships
Pinpoint’s knowledge of the telecom asset market comes from 12 years of advising small and middle market companies on equity and debt capital raising, M&A, and divestitures. In all, the firm has completed 19 deals across three continents worth $2.7 billion.
Staying focused on specific sectors has allowed the firm to develop a breadth and depth of experience and expertise, according to Semenak. “When you stay closely involved within these sectors, you get under the hood and you really understand the key drivers of their businesses — their strengths, weaknesses, opportunities, and threats,” Semenak said.
Semenak has more than 20 years of experience advising on numerous domestic and international capital raisings and M&A transactions, with a background in corporate finance and investment banking at large global firms.
Pinpoint also invests time in maintaining deep relationships with the institutions from which it raises capital and the companies that acquire its clients’ businesses and assets. “We talk to them on a daily basis and so we feel like we have the pulse of the market – the optimal terms, structure and pricing the market can bare at a given time,” explains Semenak. Pinpoint’s relationships include an extensive network of strategics, pension plans, private equity firms, insurance companies and family offices.
“Being hyper-focused gives us the ability to advise our clients strategically,” said Grandilli, referencing a strong track record and consistent client success. Pinpoint’s areas of expertise include capital raising and M&A which includes advising on business and asset sales.
Focusing on Telecom Infrastructure
Wireless: Pinpoint is a specialist in wireless infrastructure, having advised tower owners and developers, as well as businesses focused on small cells/DAS. For example, it helped Blue Ridge Towers, a leading mid-Atlantic wireless tower developer, in the sale of certain wireless tower assets to American Tower Corporation. It advised wireless tower and infrastructure developer/owner Signum Wireless on the sale of its Canadian portfolio to InSite Wireless (subsequently acquired by American Tower).
The firm also advised wireless tower developer TowerCom on its equity capital raising to finance its wireless tower build-to-suit expansion. M/C Partners and Fengate Infrastructure were the capital providers in that transaction.
Land-Under-Towers: Pinpoint advises on land-under-tower investment programs and business sales across North America and Australasia. For example, it advised Clearspan, a leading Australasian acquirer and aggregator of land-under-cell tower sites, in its assessment of strategic alternatives. Pinpoint also advised Landmark Dividend when Landmark raised capital for its international land-under-tower expansion. OPTrust, a Canadian pension plan partnered with Landmark in that deal.
Data Centers: Pinpoint advised Landmark Dividend on the equity capital raising for its new digital infrastructure (data center) business. The capital providers in that transaction were DIF and Northleaf.
Fiber: The sector that demands the most time lately is fiber, according to Semenak. With the massive fiber build-out, Pinpoint is busy raising capital for companies that are growing and running auction processes when others want to sell. In fact, it recently advised one of its clients, a midwestern fiber-to-the-home company, on the sale of its business.
“It’s a great time to be in this sector for an investment banker,” Semenak said. “We are getting a chance to work with these companies that are laying fiber in suburban and rural areas on a regional basis across the U.S. They’re making a go of it.”
Conclusion
Semenak exudes a passion for the small and mid-market companies involved in telecom infrastructure. Along with his staff, he enjoys immersing himself every day in this ever-changing industry, not only knowing the market for the technology but the people behind the business transactions.
For more information or to contact Pinpoint Capital Advisors, email info@pinpointadvisors.com, visit https://pinpointadvisors.com/ or call (647) 576-7115.
By J. Sharpe Smith, Inside Towers Technology Editor