The UK’s National Wealth Fund (NWF) has taken on a large chunk of Gigaclear’s debt after lenders to the Infracapital-backed UK fibre network provider rejected takeover proposals involving large writedowns of their loans.

A spokesperson for NWF, which in 2023 guaranteed GBP 240m of debt to Gigaclear as part of a GBP 1.5bn financing, told this news service that it “opted to prepay the guaranteed lenders’ debt, and in doing so became a lender to the transaction.”

News of the prepayment comes after lenders to Gigaclear, according to sources, rejected takeover proposals from bidders including fellow alternative fibre network providers CityFibre, Altnet Partners, which is the entity created by Zzoomm’s and FullFibre’s merger, and Vauban’s Trooli, as well as infrastructure investor Morrison.

Some of the bids received involved around 50% to 70% of Gigaclear’s around GBP 1bn of drawn debt being written off, according to three sources.

CityFibre’s proposal included converting some of the Gigaclear lenders’ loans to debt in the enlarged group that would have been created, two sources added.

This news service reported in December that a sale process for Gigaclear was underway, with Rothschild as advisor. Other players that had been considering bids for Gigaclear included fibre companies Northleaf’s Quickline and Macquarie-backed Voneus, the sources said.

Gigaclear, which is majority-owned by Infracapital and has also been backed by Equitix and Railpen, has a full-fibre network covering rural areas across 26 English counties.

Lenders are in advanced talks to formally take over the company from Infracapital and the other shareholders, sources said.

Gigaclear, Morrison and CityFibre, which is backed by investors including Antin and Mubadala and is the UK’s largest altnet, declined to comment. Trooli, Quickline, Voneus and Altnet Partners did not respond to requests for comment.

“Our responsibility is to work with stakeholders to find a solution that supports the future of an operationally strong UK infrastructure business,” said a spokesperson for Infracapital.

Gigaclear like other UK fibre network operators has faced challenges including rising construction costs and consumers being slower to switch from copper-based telecoms networks to full-fibre than hoped.

In December, the company said its network covers more than 600,000 premises, with 160,000 customers connected, indicating it is on track to achieve a 28% penetration rate. This is above peers such as CityFibre, which has a penetration rate just over 20%.

The sale process in December was driven by lenders, who have been concerned about the pace of the company’s move to profitability and consequent ability to service its debts.

In December Gigaclear announced that it secured at least GBP 80m in additional funding from its lenders. This funding will be used to keep the company operating over coming months, according to one of the sources.

Gigaclear’s lenders are ABN Amro, Credit Industriel et Commercial (CIC), HSBC, Kommunalkredit, LBBW, Lloyds, NatWest, NAB, NIBC and SEB.

LBBW, Santander, ABN Amro and NatWest declined to comment. CIC, Lloyds, NAB and SEB did not respond to requests for comment.

Before the launch of the Rothschild-led process, the company’s main shareholder Infracapital last year held discussions with LPs to the fund it invests in Gigaclear through, Infracapital Greenfield Partners I, about raising more equity to inject into the company.

According to one of the sources, while some LPs including Germany’s Golding Capital Partners had been in favour of providing more capital to Gigaclear, others such as Stepstone were opposed, with the latter view prevailing.

Stepstone and Golding did not respond to requests for comment.

According to one of the sources, Gigaclear represented around 28% of the value of Infracapital Greenfield Partners I, a fund that raised GBP 1.25bn at final close in 2017. The source added that the investment is expected to be written off.

Infracapital recently alongside its co-shareholder DWS agreed the sale of another of the fund’s portfolio companies, UK rolling stock lessor Corelink, to Porterbrook, one of the UK’s main rolling stock lessors.

Gigaclear’s funding efforts suffered a setback when Equitix, which in 2023 committed up to GBP 420m of funding to the company, ultimately only injected GBP 50m.

An Equitix spokesperson said in an emailed statement that it worked closely with Gigaclear’s “stakeholders, providing commercial insight and investment expertise in support of the business” and that while it remains “proud” of its role in Gigaclear’s expansion, “it is disappointing that the financial performance of the investment did not meet the targets that Gigaclear set itself”.

“To protect our investors, we have limited our equity commitment to our initial investment diversified across three of our funds,” said the spokesperson.

Equitix added that it is “supportive of a sustainable solution for Gigaclear and hope that ongoing discussions between the company, its lenders and shareholders will deliver a stable path forward”.

Following the decision to reject the offers fielded during the recent sales process and having provided further capital to the company in December, the lenders are now likely to wait around six to 12 months to decide on further steps for the company, sources said.

Aside from Gigaclear, the NWF, a state body previously known as the UK Infrastructure Bank and designed to support “government’s growth and clean energy missions” has backed other UK fibre network providers including CityFibre and Aberdeen Investment’s Wessex Internet and noted that “digital and technology is one of NWF’s priority sectors.”

However, in its recent strategic plan for the next five years, fibre and other telecoms did not feature among the 10 sectors where it “expects to have the deepest role.”