MIDAS SHARE TIPS: Cordiant Digital powering online boom

More than 4.5billion people use the internet every day, some 60 per cent of the global population. The number is rising fast, as is the time that everyone spends online. 

In the UK, broadband usage doubled last year, with other countries showing a similar trend. Experts predict that usage will grow at more than 65 per cent annually for at least the next five years. 

Cordiant Digital Infrastructure is keen to take advantage of this growth. The company is scheduled to float on the stock exchange next month at a price of £1 a share and expects to deliver at least 9 per cent returns per year, through dividends and capital growth. 

Keys to the future: Cordiant’s masts and cables will help drive the huge growth of broadband in Britain’s homes

From sending emails, to posting on social media and streaming live sport, all online activity relies on data centres, phone masts and fibre optic cables. 

These are collectively known as digital infrastructure and have traditionally been owned by national telecom firms such as BT, mobile phone networks such as Vodafone and big data users such as Google or Facebook. 

In recent years, this has changed. Owners have been selling assets and using the cash to invest in their core businesses. Entrepreneurs have moved into the sector, building data centres, erecting masts and laying cables. And specialist operators have sprung up, including some very large companies. 

American Tower, for example, owns more than 180,000 masts and other sites worldwide, and is valued on the New York Stock Exchange at $101billion (£74billion). From 2007 to 2018, Steven Marshall, a plain-speaking Englishman from Saddleworth, Greater Manchester, was executive vice president of American Tower. 

In that time, the shares rose from $39 to $145, as sales and profits more than trebled. Now Marshall has taken the helm at Cordiant and would like to achieve something similar for British shareholders.

Cordiant hopes to raise between £300million and £500 million to buy masts, data centres and fibre optic cabling in the UK, Europe and US. 

Marshall is already in advanced negotiations on three assets worth hundreds of millions of pounds and has identified a pipeline valued at nearly £1.5billion. Initial deals are likely to take place in Europe and the US, but British assets will follow in time. 

Prices are not cheap but the sites are still expected to generate significant returns for investors. 

Tenants are invariably big, well-known names, such as Vodafone or Google, and contracts are long-term. Rents tend to rise in line with inflation and most users ask for more space as data usage grows. 

Cordiant will also focus on newish assets, with sufficient capacity to add more tenants over the years – and the group is likely to build sites itself as the business expands. 

Application forms can be found on page 193 of the prospectus. Investors can also apply through intermediaries such as AJ Bell or Hargreaves Lansdown. 

A 1p dividend is expected in the first year, rising to between 2p and 3p in 2022, building up to at least 4p by 2025. There are high hopes for decent share price growth over the next few years, and shareholders will receive a bonus share for every eight they buy. 

These shares can be converted to an ordinary share at the £1 flotation price in the first six months after Cordiant lists and the price will then increase by 9 per cent annually. If ordinary shares increase by more than that, investors will be able to convert the bonus shares at a discount.

If not, they can just ignore them.

Midas verdict: Cordiant Digital Infrastructure gives investors the chance to tap into a fast-growing market, Marshall has a track record of success and his team have decades of experience in the industry too. At £1, the shares are a buy.

To be listed on: Main market Ticker: CORD Contact: cordiantdigitaltrust.com or 01481 742 742 (calls charged at Guernsey rate)