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A U.S. investment firm that has been quietly amassing a trove of Canadian fibre and data-centre assets has acquired Toronto-based Beanfield Technologies Inc., a privately owned fibre-optic internet provider, with an investment of more than $130-million.

Colony Capital Inc., a real estate investment firm based in Los Angeles, branched into digital infrastructure over the past year, acquiring Digital Bridge Holdings LLC, with which it raised a US$4-billion fund, Digital Colony Partners. The fund has a mandate to invest in communications assets such as wireless towers, data centres, fibre lines and cellular technology that will be used in next-generation 5G networks.

In its early days, Florida-based Digital Colony has been on a Canadian shopping spree. It closed the deal to buy Beanfield last month, and Colony Capital disclosed it in a quarterly financial filing on Friday. The transaction came just five months after Digital Colony paid $720-million to buy Cogeco Peer 1, the former enterprise-connectivity division of cable company Cogeco Communications Inc.

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Beanfield has been building fibre-optic infrastructure in Toronto since the 1990s and now has a total of about 350 kilometres of fibre lines in that city and Montreal, providing more than 700 commercial and residential buildings with telecom services.

In a joint deal with European fund EQT announced in May, Digital Colony also said it will acquire Zayo Group Holdings Inc., a U.S. company that bought Canada’s Allstream Inc. in 2016 from what was then Manitoba Telecom Services Inc. Digital Colony and EQT plan to take Zayo private in a transaction valued at US$8.4-billion (not including the assumption of $5.9-billion in debt) and hope to close the deal in the first quarter of 2020.

“This is an extremely exciting time for digital infrastructure as technology drives unprecedented changes across the industry and creates attractive opportunities,” Steven Sonnenstein, managing director of Digital Colony, said in an e-mail to The Globe and Mail on Tuesday. “As data traffic and storage needs continue to grow, Europe and the Americas are at an inflection point for digital infrastructure. New technologies will only accelerate the demand and costs to deploy.”

Mr. Sonnenstein would not comment specifically on other potential Canadian deals, but said, “We remain bullish on the Canadian digital infrastructure market and will continue to seek opportunities to invest in telecommunications infrastructure in the region in a strategic and effective manner.”

After inquiries from The Globe, Digital Colony issued a news release on the Beanfield acquisition on Tuesday afternoon. It did not disclose the financial terms, but the earnings report Colony Capital published last week stated that Digital Colony invested US$100-million in Beanfield (or about $132-million Canadian).

Cogeco Peer 1 (which Digital Colony renamed Aptum Technologies in August) has 3,200 kilometres of fibre in Toronto and Montreal, plus 14 data centres in the United States and Canada.

When Zayo acquired Allstream (the former AT&T Canada), it had about 20,000 km of long-haul fibre connecting major Canadian centres and 10 U.S. network access points, plus about 9,000 km of fibre connecting individual customers in Toronto, Montreal, Vancouver, Ottawa and Calgary.

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Beanfield hired Bank Street Group, a Connecticut-based investment firm that advises companies in the communications and technology sector, and has been looking for a buyer since at least the beginning of 2019.

Dan Armstrong, who co-founded Beanfield with Chris Amendola, will remain with the company as chief executive officer.

In its early days, Beanfield offered fibre-based telecom services to businesses, but over the past decade or so has expanded into the residential market, offering apartment dwellers in new condo developments high-speed internet service. Digital Colony said on Tuesday that Beanfield will continue serving residential clients.

“It will continue to be business as usual at Beanfield," Mr. Sonnenstein said. "We believe the company has a great management team in place.” He added that Aptum and Beanfield will operate independently.

Colony Capital is a giant in real estate investing, and made Canadian headlines in 2006, when it jointly paid $3.3-billion for the Fairmont Hotels & Resorts chain through a consortium of investors that included the Saudi billionaire Prince al-Waleed bin Talal.

Thomas Barrack Jr., who was chairman of U.S. President Donald Trump’s inaugural committee, founded Colony in 1991. He is currently the CEO, but Colony has announced he plans to step down from that role in 2020, although he will remain executive chairman.

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With a report from James Bradshaw

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