Cordiant Digital Infrastructure (CORD ) is under pressure to make good its promise of share buybacks after the heavily discounted closed-end fund today paid out  €68m (£58m) in cash to make its fourth big investment since launch two-and-a-half years ago.

The £550m London-listed investment company has agreed to buy 100% of Speed Fibre DAC, Ireland’s leading open access fibre infrastructure provider, in a move that will expand its portfolio away from eastern Europe.

Cordiant is buying the asset from the Irish Infrastructure fund for a total enterprise value of €190.5m, although it will pay €97m for the equity, €68m in cash and €29m through a four-year loan costing an initial interest rate of 6%.

The purchase price represents an 8.3 times multiple of last year’s revenues of €80m from which it made pre-tax profits of €23m.

Speed Fibre vital stats

Speed Fibre operates 5,400km of owned and leased fibre and wireless networks in Ireland. Although primarily a backbone provider serving internet service providers, companies and the government, its retail Magnet Plus subsidiary also serves 10,000 businesses and consumers.

‘As a fourth significant investment, Speed Fibre represents a further strategic milestone for the company. Speed Fibre operates in a new market for CORD where data consumption growth is expected to be among the highest in Europe,’ said chair Shonaid Jemmett-Page.

She added that it provided the 4%-yielding alternative income fund additional, highly visible cashflows from wholesale contracts with global blue-chip customers that offered the potential to generate long-term, attractive returns to shareholders.

The £595m portfolio’s other investments include Polish digital infrastructure platform Emitel, US-based data centre Hudson and Czech company CRA.

The acquisition reduces group cash from £122m to £78m and lifts gearing, or borrowing, to 40% of gross asset value.

Alan Brierley, analyst at CORD’s broker Investec, repeated his ‘buy’ recommendation but said managers at Cordiant Capital needed to demonstrate the value of Speed Fibre given they had prioritised the acquisition over buybacks to narrow the wide 38% discount to net asset value at which the shares trade.

In February, Jemmett-Page said £20m had been set aside to buy back shares, but there have been no purchases as yet.

‘We would also like to see the company use some of its remaining liquidity to execute on its previously announced buyback programme,’ said Brierley.

 Cordiant’s derated shares

Source: Morningstar