Digital Bridge, PE Firm Snag ExteNet for $1B

Distributed networking vendor ExteNet Systems has agreed to be acquired by Digital Bridge Holdings, an investment group with several tower holdings, and a private equity firm, in a deal worth more than $1 billion.

Privately held ExteNet Systems Inc. announced the recapitalization plan on Thursday, explaining that Digital Bridge Holdings, along with private equity firm Stonepeak Infrastructure Partners, will provide "over $1 billion" to acquire the interests of its current investors. (See ExteNet Reveals $1B Recapitalization Plan.)

ExteNet was founded in 2004 with several original investors, including Columbia Capital, Centennial Ventures, Sevin Rosen Funds, CenterPoint Ventures and Palomar Ventures. A series B round in 2010 brought in a tower company, SBA Towers, and Quantum Strategic Partners, along with $128.4 million from its new and existing investors. (See ExteNet Nabs $128.4M.)

Digital Bridge and Stonepeak's investment will upend the original investors and provide additional capital for ExteNet to further its work on small cells and distributed antenna systems (DAS), which it provides for all four of the US tier one wireless operators.

ExteNet CEO Ross Manire will remain at the helm of the company, and Digital Bridge CEO Marc Ganzi will join as Chairman of the Board, along with one additional new Digital Bridge board member and two from Stonepeak. Manire says he expects the deal to close by October.

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ExteNet is predicting big growth in small cells and DAS as wireless operators continue to fill in the holes on their LTE networks and work to improve indoor coverage. Improving cellular performance in stadiums has also been a big priority of wireless operators of late, which is a sweet spot for ExteNet with customers like Marlins Park and the American Hockey League. (See C-RAN Small Cell Notches a Stadium Win, Verizon Trumpets Network Densification Plans and LTE Spurs Indoor Wireless Coverage Biz.)

Manire says that the buyout was designed to align ExteNet with investors that have "a longer-term horizon" on their fund cycles, but he didn't reveal the exact terms of the deal. Beyond the fresh cash, however, he expects to gain business by working with new sister company Vertical Bridge, which Digital Bridge also owns.

Manire says they are calling on the same customers, but with different products -- Vertical builds macro cell sites and leases towers, while ExteNet provides the distributed networking.

"We don't build macro cell sites or towers or rooftop macro sites, so to the extent we run along opportunities that those are the appropriate technologies to be using, we'll refer them to Alex [Gellman, CEO] at Vertical and vice versa," he says.

— Sarah Thomas, , Editorial Operations Director, Light Reading