While venture capitalists are pouring money into promising mobile apps, some of the more seasoned investors in the mobile ecosystem are focusing on wireless infrastructure. “We are more focused on the infrastructure opportunity; the services and the plumbing that enables a lot of this transition to mobile,” says Brian Clark, managing partner at private equity firm MC Partners. “One of the really important trends that you’ve seen there is bandwidth and we have played that. We love the tower business model.” MC Partners has invested in Metro PCS, Lighttower, and Public Mobile.
Cloud computing is another opportunity of interest to venture capitalists and private equity investors. During the third quarter, a group of investors including Comcast Ventures, Highland Capital Partners, and Kleiner Perkins invested $22 million in Nebula, which as its name suggests is focused on cloud computing infrastructures. This was by far the quarter’s biggest investment in the telecom sector, according to Thomson Reuters and PricewaterhouseCoopers, and also exceeded the largest deal in the wireless sector. (Mobile commerce platform provider Branding Brands was the biggest winner in the wireless sector, raising $7.2 million in the third quarter.)
Richard Lukaj is senior managing director, at The Bank Street Group and has been called a Wizard of Wall Street. After a successful career at Bear Stearns, the still-young Lukaj decided to focus on telecommunications and media investments when he founded Bank Street. He says 2012 has been a very good year and he expects more of the same in 2013.
“We see tons of new financings and on the M&A front there is also tons of activity,” says Lukaj. “Infrastructure is strong, software as a service, or managed services, we see lots of activity there as well.” Lukaj says companies are taking advantage of low interest rates to raise capital to scale successful business models, often by purchasing firms that have the expertise they need in a certain area. “On the infrastructure side it takes enormous and unpredictable time to replicate the assets,” he says. “It can be more effective and valuable to acquire [the assets needed for expansion].”
For tower operators, DAS has been one area where buying has often made more sense than building. Lukaj and Clark both see DAS as a promising area for equity investors, and expect more acquisition activity in the months ahead.
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