Pru and Woodford funds to accelerate rural broadband rollout

Funds run by Prudential and Neil Woodford have agreed to back a rapid rollout of ultrafast broadband networks in rural areas of the UK.

Gigaclear, the British broadband networks builder, will this week announce new equity investment that will double the size of its business. The funds come from Infracapital, the infrastructure investment arm of Prudential, and Woodford Investment Management.

The money will be used to accelerate the rollout of ultrafast fibre-to-the-home services to villages and small towns around the UK that have poor access to internet services.

The group offers speeds of up to 1 gigabits per second - about 50 times faster than the national average - to homes in rural areas. The group needs to secure a certain number of homes before it can start laying the fibre cables to the houses in the area to guarantee its returns.

The group considered raising money through an initial public offering but instead decided to remain private with more money from institutional investors, according to Matthew Hare, chief executive. He said that a flotation might be again considered in the future, however.

Gigaclear has secured £30m in equity from Infracapital and Woodford, which will more than double the £20m raised by the company to date. Infracapital will invest up to £20m, while Mr Woodford's funds have already made two investments in the group, which means that each will take a stake of about a third in Gigaclear.

Ed Clarke, co-founder of Infracapital, said that it would be prepared to invest further as the company needed to rollout its networks.

"This is a unique opportunity to invest at an early stage in the development of high speed communications infrastructure for the UK's underserved rural population."

Gigaclear targets areas typically left with slower broadband access by the larger broadband providers, which tend to target areas of higher population where customers are more easily signed-up.

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Gigaclear offers much higher speeds, however. It has already built and operates 23 rural fibre networks, and has a pipeline with a further 31 in construction. It is targeting a market of 1.5m rural households and businesses across thousands of rural communities seeking ultrafast and reliable broadband, according to Mr Hare.

"We are now going to build a lot more networks a lot faster," he said.

Mr Hare said that the investments from Prudential and Mr Woodford would prove "a major breakthrough for Gigaclear". The divide between cut-off rural communities and connected towns and cities has never been greater, he added, but Gigaclear would aim to bridge the divide by building pure fibre networks.

"These investments give us the resources needed to accelerate our roll out over the next 24 months to many more communities."

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