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Investing in infrastructure

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“Our modern society demands future-proof infrastructure that allows for flawless communication at any time. Fixed cable networks as well as communications towers and data centers are essential to guarantee today’s communication flows,” states Managing Director Randolf Nijsse.

Mr. Nijsse is one of the three partners that set up CIF back in 2008. “In 2007, the market was still strong, and the need was felt for exposure in investment associated with real estate. However, we did not want to focus on real estate but instead wanted to target an associated field. As a fund for institutional investors in infrastructure, we decided on the communications market, which had been privatized some time ago and which was and still is reasonably accessible, in contrast to the energy sector which is still highly regulated.”

CIF aims for capital-intensive investments and stable returns by renting out communication infrastructure with a limited risk profile. “Every year, a rent correction for inflation is taken on, which suits institutional investors like pension funds really well,” adds Mr. Nijsse. “Our strategy is to generate maximum yield for our investors while offering long-term state-of-the-art infrastructure and maximum utilization for our partners from the industry. We aim for long-term returns on our infrastructure assets.”

Indeed, CIF has become a first-class investment fund that takes on long-range views of its investments in Dutch communications infrastructure such as transmission masts and cable infrastructure. It all started with the acquisition of a cable company in 2008.

“We took over CAIW Group as a seed investment for our fund. CAIW is the third-largest cable operator in the Netherlands and provides over 200,000 households with television, Internet and voice services,” points out Mr. Nijsse. Rabo Bouwfonds and one pension fund were the first investors and acquired broadcasting antennae, followed by two other major funds, ABP and PGGM, in 2010, acknowledging CIF’s sound investment plan.

Today, CIF manages assets of 700 million EUR, among them fixed cable networks, communications towers and data centers. “60% of our assets are cable networks in over 25 municipalities in the Netherlands. We have the cable network and are adding a glass fiber network to suit our long-term strategy,” explains Mr. Nijsse. “So we invest in upgrading the existing infrastructure. While we provide the new improved infrastructure, consumers can switch when they are ready.”

Another 35% of the assets are communications towers. Here, CIF has entered a joint venture with TenneT, focusing on towers near petrol stations and similar objects, which it rents to mobile phone providers. “We own the tower, rent or own the land and also take on maintenance, just like you would for a building,” states Mr. Nijsse.

Data centers have a small share in the fund’s assets, and investments in this field are only realized by CIF if the center is related to either cable networks of communications towers. “We invest in the building and the equipment related to the building, not in the communications technology that is applied here,” stresses Mr. Nijsse.

Generally speaking, CIF only invests in assets with long life cycles in the communications technology as such, but it leaves it to companies that rent towers and networks. CIF wants to establish long-standing relationships with its customers, investing in mutual trust. Its customers are telecommunication operators, suppliers of Internet, television, voice and phone services as well as cable users for fixed networks.

It also serves some corporate clients such as Dutch Railway, which require communications facilities along its railways. “We always aim to be the best supplier in the areas we are active in. Infrastructure is a local game. With some 25 municipalities, we cover 5% of the access market in the Netherlands. We go from region to region, but we have no intention to get a 50% market share. More important is our ambition to invest the money of our fund owners the best we can,” says Mr. Nijsse.

CIF is currently thinking about going international by starting activities in Northwestern Europe in 2014. It seems that CIF has met a need in the last five years. Operators need an efficient use of capital and investments in infrastructure that is used efficiently.

“We see this trend for the whole of Europe,” adds Mr. Nijsse. “Many fixed networks are old and investment is desperately needed. As operators cannot finance the new networks themselves, there is room for neutral infrastructure management. And this is where we come in and invest on behalf of our shareholders.”

CIF is now raising funds for expansion abroad, and it is talking to foreign investors interested in communications infrastructure.

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