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Bevan Slattery-founded internet infrastructure provider Superloop (ASX: SLC) has seized on the post-COVID recovery of Australia’s tertiary education sector by penning a deal of up to $50 million for VostroNet Holdings, a specialist student accommodation broadband provider.
Superloop sees the acquisition as the next step to developing its high-margin OnNet Smart Communities division through the delivery of high-speed fibre-to-the-premises (FTTP) capabilities for multi-dwelling-unit (MDU) properties such as student accommodation, build-to-rent projects and broadacre developments.
Among the Brisbane-based VostroNet’s key WiFi customers are UniLodge, Iglu Student Accommodation, Queensland University of Technology and Sunshine Coast Council. The company’s FTTP customers include Brisbane Skytower developer Billbergia, residential developer Consolidated Properties and construction industry super fund CBUS.
Superloop sees the acquisition making the company a market leader in supplying broadband to the tertiary student accommodation sector with its national coverage increasing to about 40,000 student beds.
In its earnings results released in August, Superloop noted that COVID-19 had impacted the company’s student accommodation and hotel operations in FY22, but the group did point out that the student market had recently recovered to pre-COVID levels.
"We are extremely pleased with this transaction as in addition to strengthening our position in the provision of on-net broadband services to the student accommodation market, it also adds capability in the growing build-to-rent and MDU markets,” says Superloop CEO Paul Tyler.
“We welcome the employees from VostroNet to Superloop and look forward to deepening the relationship.”
VostroNet’s revenue base is dominated by recurring income with the acquisition expected to deliver Superloop EBITDA of about $4.6 million in FY23 on a pro forma basis.
The base price for the VostroNet acquisition is $35 million, comprising $24.5 million in cash and $10.5 million in Superloop shares.
An additional $15 million is on the table subject to earn-out targets being achieved, including $2.1 million in synergies over the first two years of the acquisition. If the full earn-out is achieved, the deal will be priced on an expected multiple of 7.5 times EDITDA.
Superloop says the cash component will be funded from existing cash reserves which stood at $42.8m at the end of June this year.
The deal set for completion by the end of this calendar year.
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