SDC Capital Partners LLC is making a $197 million investment in ALLO Communications, LLC, which will give SDC a 48% equity stake in ALLO, which is 92.5% owned by Nelnet.
The deal is expected to close sometime this month.
ALLO plans to use the funds and money from debt financing to continue building out its fiber optic network in the Midwest and to partially redeem outstanding senior preferred interests held by Nelnet.
ALLO has been building out its fiber network since 2004, providing service to 53,000 residential subscribers and thousands of business and government customers across a dozen communities in Nebraska and Colorado. About a year ago, the fiber provider launched a managed Wi-Fi service.
“Exceptional communications solutions for business, government, and residential customers have become even more important during the pandemic,” said Brad Moline, ALLO president, in a prepared statement.
“SDC’s investment will provide the necessary capital to build out fiber networks primarily in Nebraska and Colorado and help communities and businesses meet the increasing demand for high-speed, reliable broadband with the best and latest technologies,” said Terry Heimes, Nelnet chief operating officer. “SDC’s deep sector experience and relationship network make it the ideal long-term partner . . . Over the last five years, we have seen firsthand the value ALLO’s technology and service bring to a community.”
Nelnet acquired 92.5 percent of the outstanding equity and membership interests of ALLO on December 31, 2015. Since that transaction, Nelnet has invested significant additional capital in ALLO to build networks in Lincoln, Hastings, Imperial, and Norfolk, Nebraska and Fort Morgan and Breckenridge, Colorado.
Goldman Sachs & Co. LLC acted as financial advisor to Nelnet in connection with the transaction.