Company received recent 30% stake investment
Infrastructure company Vertical Bridge has brought on a new major investor, with an influx of capital that it plans to use to expand its tower and site portfolio.
Caisse de dépôt et placement du Québec (CDPQ), a Canadian public pension institutional investor, will be acquiring a 30% stake in Vertical Bridge. The company plans to use the investment to expand its broadband and broadcast tower portfolio, including real estate, small cells and other investments, ahead of 5G network deployments.
Alex Gellman, CEO and co-founder of the company, said that Vertical Bridge’s strategy is one of remaining a private company with a long-term perspective, while also achieving scale. The company is the largest private telecom infrastructure owner and operator in the U.S.
Gellman said that over time, there has been a shift in the tower industry, in terms of where investment is coming from: from private equity, to infrastructure funds — and in recent years, to “permanent capital,” or investments by pension funds or state-owned investment funds seeking to invest directly with a company. He said that CDPQ “has an opportunity to grow with us, and they also have strong interest in investing additional capital.”
Emmanuel Jaclot, EVP of Infrastructure at CDPQ, said in a statement that CDPQ will support Vertical Bridge’s “next stages of development and long-term growth in an attractive wireless infrastructure sector.”
“We want to build a lot of towers, and we look to continue to do acquisitions that make sense to us,” Gellman said, when asked about how the company plans to leverage the new funding. Vertical Bridge says that since it began in 2014, it has completed more than 250 acquisitions and grown its portfolio to over 266,000 sites. While “it’s a little bit of business as usual,” Gellman said, ultimately this is a step toward achieving Vertical Bridge’s strategy.
The tower business, driven by changes in operators’ network needs and more centralization, has been evolving in ways that pressure tower companies to become ever-larger in order to succeed, Gellman said.
“It’s really only the public tower companies that have been able to scale,” Gellman said. When Vertical Bridge began, he said, “we wanted to be able to get to scale and stay private, and have a long-term perspective. So this is a big step along that route.”
Vertical Bridge’s investors include Digital Bridge, The Jordan Company, Goldman Sachs Infrastructure Partners, Stonepeak Infrastructure Partners, The Edgewater Funds, CalSTRS and Dock Square Capital, and the company says that its executive team holds a “significant stake” as well.
In terms of areas of interest, Gellman said in-building coverage is a major area of interest for its customers and carriers — even as millimeter-wave spectrum frequencies that are coming into play in 5G networks pose a significant challenge for achieving in-building coverage. He is also interested in watching how the deployment and ownership of in-building coverage for 5G will play out, he said. Gellman said that the company feels that the Citizens Broadband Radio Service will be part of the telecom ecosystem going forward and that he has seen the conversation around that technology shift from focusing primarily on indoor coverage to the possibility of outdoor use as well.
While Gellman estimates that a real push to physically alter mobile networks to support full-fledged 5G is still a year to two years away, he said that Vertical Bridge is seeing “significant action and investment ahead of 5G” in terms of fill-in, densification and extending 4G coverage areas. The sites being deployed are also more easily upgradeable to the next generation of technology, he added.
