KKR and Reggeborgh announced a partnership for the strong expansion of Deutsche Glasfaser (DG). DG plans, constructs, and operates fibre-optic networks in Germany and provides German households and companies with fast broadband connections.
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KKR will acquire a majority stake in DG, which is currently fully owned by Reggeborgh. In a joint effort, the two partners will provide DG with the long-term capital to embark on an ambitious growth program whereby approximately €450m is to be invested in the further roll-out of the German fibre optics infrastructure over the next few years.
Deutsche Glasfaser focuses on the rural and suburban parts of Germany and is active across the entire value chain, from passive to active infrastructure up to acting as an internet service provider.
As a fibre-to-the-home (FTTH) business, DG has already connected about 100,000 German households and companies to its fibre-optic network, which is the fastest broadband access technology in the world.
Data traffic and internet usage are constantly increasing, favoring high bandwidth provisions such as fibre technology. At the same time, broadband penetration in Germany is still significantly below the European average.
With its planned investments, DG will help to connect more people with its high-speed fibre-optic network and thereby also support the German government in its ambition to achieve 100 percent broadband coverage with at least 50 megabit per second by 2018.
KKR has a more than 20-year track record of investing in technology and telecommunications. In Germany, KKR built-up Versatel, the leading German fibre-based fixed line telecom provider which owns the second largest fibre infrastructure in Germany after Deutsche Telekom.
Since 1999, KKR deployed more than $4.7 billion of equity in 15 German companies, working both with trusted German partners such as Siemens, Bosch, Daimler, Linde and Bertelsmann, as well as with innovative entrepreneurs of leading companies such as WILD Flavors and Arago. Currently, 28 of KKR's global portfolio companies have operations in Germany and employ more than 20,000 people in the country.
The investment is funded by KKR's Infrastructure Fund II.
The transaction is subject to customary closing conditions, including relevant antitrust clearance. ■