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Exit Ramp: Dark Fiber Lights Up SummitIG’s Growth Story

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Published: February 6th, 2023
SummitIG operates in an important niche of the bustling telecom infrastructure market and has been backed by SDC since 2019.

As cloud computing, streaming content, 5G wireless services and other data-intensive applications drive demand for fiber bandwidth, fast-growing Summit Infrastructure Group Inc., or SummitIG, could attract interest.

The SDC Capital Partners LLC and Harrison Street Real Estate Capital LLC portfolio company owns a fiber network that spans more than 550 miles, from the major data center hub of northern Virginia to Richmond, Va. At the close of 2022, SummitIG generated nearly $40 million in annualized recurring revenue, including future revenue that has been booked, Moody’s Investors Service Inc. reported in January.

The company outstripped expectations by growing revenue at more than 30% per year, up from about $21.8 million annualized recurring revenue as of Sept. 30, 2020. The growth prompted Moody’s to put SummitIG on review for a potential upgrade on Jan. 6. And SummitIG has managed to pare down debt as it has grown, with Moody’s reporting debt at 6.5 times Ebitda, reduced from 9.5 times Ebitda at the time of a late 2020 notes issuance.

Meanwhile, sponsors and infrastructure investors such as KKR & Co. (KKR), Blackstone Infrastructure Partners, Aimpera Capital Partners LLC and DigitalBridge Group Inc. (DBRG) have bought up fiber networking companies. As majority holder SDC marks the fourth anniversary of its investment this year, the digital infrastructure investment firm may have opportunities to exit the fiber business.

SummitIG specializes in dark fiber — meaning fiber that is not “lit.” Fiber optic cables transmit data using light. In a dark fiber model, corporations, telecom infrastructure companies, government offices or other customers operate the system — providing the gear that lights the network.

Editor’s note: The original, full version of this article was published Jan. 24, 2023, on The Deal’s premium subscription website. For access, log in to TheDeal.com or use the form below to request a free trial.

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