Covage financing of Hérault fiber network

On 5 February, the département of Hérault awarded Covage the public service delegation (DSP) contract for the design, deployment, operation, marketing and financing of the Hérault Numérique FTTH network, with the objective of building 255,000 homes over five years. Thanks to this partnership, the fibre network infrastructure operator will contribute to giving access to high-speed broadband services across the Hérault département, around Montpellier, helping consumers, businesses and local authorities make the most of digital services. It will enable the local government to drive the ambitions of the France Très Haut Débit (France high-speed broadband) plan’s timetable.

Hérault thereby renewed its trust in Covage, a partner of the département for ten years through the num’hér@ult fibre network for companies.

The non-recourse debt, including a €183 million term loan with a maturity of 21.5 years, enables Covage to diversify and optimise the financing of the €350 million investment project. The long-term loan, structured as a soft mini perm, was arranged and subscribed for 40% by Natixis and Caisse d’Epargne Languedoc Roussillon, 30% by Banque Postale and 30% by Société Générale Corporate & Investment Banking. Natixis also acted as Covage’s financial advisor for the transaction.

The setup allows for a long period of availability of the funds (five years), consistent with the network’s development and construction phase. At the end of this drawdown period, the loan will be amortized according to a profile and timeline defined to take into account the project’s financial soundness and the duration of the public service delegation contract. Covage and its financial partners have thus designed a financing tool that is particularly well adapted to the characteristics and constraints of the Hérault high-speed broadband rollout project.

“With more than 10 years of proven experience in operating public service delegation contracts, Covage has demonstrated its ability to muster complementary alternative sources of financing for its projects. This financing brings together leading players in the French infrastructure debt market as well as one of the leading local players – for the benefit of Hérault residents, visitors and businesses. We are particularly proud to see one of our DSP with one of the largest financing in this market” comments Gabriele Mandurino, Covage’s Chief Financial Officer.

“Natixis is pleased to have supported Covage in this operation, both with advice and arrangement services, alongside Caisse d’Epargne Languedoc-Roussillon. Indeed, we believe that the deployment of FTTH is essential for France’s development,” said Emmanuel Gillet-Lagarde, Global Head of Infrastructure Financing at Natixis.