Deutsche Glasfaser Looks for Options in Case Funding Plans Fail

(Bloomberg) -- German fiber company Deutsche Glasfaser Holding GmbH is exploring options in case its plan to raise preferred equity fails. 

The firm, owned by private equity firm EQT Corp. and Canadian pension fund OMERS, is working with Lazard Inc to consider alternatives, said people familiar with the matter, who spoke on the condition of anonymity. Boston Consulting Group is also carrying out an independent business review, the people said.

In the meantime, Deutsche Glasfaser is continuing its process to raise preferred equity, as reported by Bloomberg in July. Goldman Sachs Group Inc. is running the fundraising efforts, which so far haven’t resulted in a deal, said the people familiar. The shareholders are willing to commit €600 million ($705 million) of equity or more between themselves, some of the people said.

A spokesperson for Deutsche Glasfaser didn’t immediately respond to a request for comment. Representatives for EQT, OMERS, Lazard, Goldman Sachs and BCG declined to comment.

Deutsche Glasfaser is looking to raise new money to finance its business plan, but capital raising across the fiber sector has been challenging due to higher construction and financing costs. The company had previously tried to raise cash through fresh equity, but potential investors balked at the company’s high leverage. 

Deutsche Glasfaser already has a debt package of around €7 billion that was taken out to fund its fiber-to-the-home rollout in rural and suburban Germany. 

EQT and OMERS acquired Deutsche Glasfaser in 2020, with EQT owning 51% and Omers the remaining 49%. The company competes with Deutsche Telekom AG as well as smaller players looking to capitalize on the relatively low penetration of fiber in Germany.

--With assistance from Layan Odeh and Paula Sambo.

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