4 days ago
This company could be key to cashing in on AI
Questor is The Telegraph's stock-picking column, helping you decode the markets and offering insights on where to invest
The importance of data has come to the fore once again with the rise in AI and the rapid growth of its applications across our professional and personal lives.
Equally as important is the infrastructure that facilitates the processing and dissemination of data, and digital infrastructure has been a sector of growing relevance and excitement in recent years. Investors have been attracted by the combination of growth opportunities as the demand for data services is projected to expand over the coming decades, and the reliable income – often inflation-linked – that the assets typically generate.
Following recent equity market turbulence, we have seen a renewed investor interest in the more defensive characteristics of infrastructure investing, especially given the M&A transactions to have been announced across the London-listed infrastructure investment company universe so far during 2025. This serves to highlight the ongoing disconnect between private and public market valuations.
One way to access this secular growth theme is through Cordiant Digital Infrastructure, the first London-listed digital infrastructure specialist investment company that launched in early 2021. The strategy provides investors with exposure to assets underpinning the digital economy, including data centres, mobile telecommunications and broadcast towers, and fibre-optic networks.
While these might not be the most glamorous businesses on first inspection, they are increasingly critical as societies and economies digitise – and assets can benefit from the combination of national strategic importance and barriers to introducing competing assets.
The strategy is global, but the portfolio is centred around two key businesses in Central Europe, namely Emitel, the dominant broadcast and telecom infrastructure provider in Poland, and České Radiokomunikace (CRA), a leading Czech Republic operator with a blend of towers, fibre and expanding data centre capacity.
Together, these two investments accounted for around 83pc of Cordiant's portfolio as at March 31 2025, and both benefit from highly visible contracted revenues, often inflation-linked. This helps to offset concerns an investor might have around portfolio concentration, particularly given the diversified nature of each of the two businesses and the number of underlying infrastructure assets each company owns.
Cordiant is managed by a specialist investment manager, with the core team comprising a mix of former industry executives and private market investing specialists, following the team's 'Buy, Build & Grow' strategy.
The team has proved its abilities in driving both organic and inorganic growth at Cordiant's portfolio companies, with Emitel and CRA having delivered robust revenue and EBITDA growth since acquisition. Indeed, CRA's growth has accelerated under Cordiant's ownership, and the data centre and cloud business services expansions that are under way offer the potential for value growth as the business segments develop further.
Other portfolio companies include Irish fibre infrastructure platform Speed Fibre, New York data centre business Hudson, Belgian data centre business Datacenter United, and Belgian towers business BTC – collectively representing circa 17pc of the portfolio by value. These investments have helped to increase diversification across the portfolio, but the investment case remains dominated by the Central European businesses, for now.
Alongside the growth opportunities embedded within the portfolio, income remains a central part of Cordiant's investment case. The company follows a progressive dividend policy, with dividends of 4.35p declared in respect of the year to March 31 2025, up 3.6pc on the previous year and more than fully covered.
Additionally, the cash-generative nature of the portfolio and contractual, often inflation-linked, nature of the revenues should pave the way for further dividend growth over the coming years.
In seeking to address questions around capital allocation and persistent share price discounts, the fully independent board allocated up to £20m to share buybacks in early 2023, which has been executed sporadically, the last occasion being July 2025. Nonetheless, the shares have staged a significant recovery since trading around 62p in early 2024, to above 90p since late May 2025.
We would also highlight that, while the company has not been as active with share buybacks as some other listed infrastructure investment companies, the board and manager have been very active in acquiring shares – creating strong alignment with shareholders – with aggregate insider ownership of approximately 2pc of the company.
Indeed, management fees are based on market capitalisation rather than net asset value, creating further incentive for the manager to narrow the share price discount to NAV. Similarly, the performance fee is based on the lower of NAV or share price total returns.
The company is relatively conservative with its approach to use of debt, with consolidated net gearing representing approximately 40pc of gross asset value, and net leverage a 4.5x multiple of portfolio EBITDA, with limited refinancing risk until 2029.
Similarly, the portfolio's valuation is undemanding when contrasted against listed comparables. This adds another layer of value beyond the share price discount.
Questor last tipped Cordiant in mid-September when the company was trading around 81p. Since that time the NAV per share has grown (to 129.6p at March 31 2025 from 120.1p a year earlier), mirroring the growth of the underlying portfolio, and the discount has narrowed. However, the shares still sit on a double-digit discount of around 25pc and offer a dividend yield of 4.5pc.
For investors who can stomach the portfolio's concentration, Cordiant offers an attractive combination of potential growth in both capital and income, with multiple layers of value, and a manager that is highly incentivised to narrow the share price discount further.
