Digital 9 Infrastructure (DGI9 ) shares have slumped after the sale of its Aqua Comms holding for an ‘extremely disappointing’ price of $54m (£44m).

The digital infrastructure investment company has been offloading its holdings as part of a managed wind-down being led by manager InfraRed. Its latest divestment has seen it sell subsea fibre business Aqua Comms to EXA Infrastructure.

EXA will pay $54m for the asset, which is a 28% discount to the valuation of $75m as at the end of June. After transaction costs of $5.4m are deducted, the net proceeds will total $48m, or a 36% discount to the last valuation. This has caused the shares to tumble nearly 30% since the sale was announced on Friday.

The price represents a huge mark-down from the $283m valuation at the end of December 2023. It follows a $208m write-down last year to reflect the company’s inability to fund its Asian growth projects, as well as a shift in the interest rate environment and macro and geopolitical volatility that scuppered the infrastructure M&A market.

‘This has contributed to a reduction in the buyer universe for this asset and impacted the pricing secured,’ said the fund.

The fund also blamed ‘overbuild of subsea cable capacity’ that has outstripped demand’ and led to a 15% a year decline in pricing over the past five years.

‘This decline is expected to persist meaning that any extended hold period by the company would have presented a high risk of further value erosion for shareholders,’ said Digital 9.

Eric Sanderson, chair of the fund, said though the pricing outcome for Aqua Comms was ‘extremely disappointing’, the fund had completed a ‘far-reaching auction process’ over a nine-month period to ‘fully market test the value of the business’.

‘Given the current market conditions and business-specific factors, we are confident this transaction represents the best option for shareholders in the context of the orderly wind-down,’ he said.

Stifel analyst Will Crighton said the sale price was a ‘severely worse outcome than shareholders and even our bearish views would have been hoping for’.

‘One can question whether the value was ever there, or rather that this value was destroyed over such a short time period, and so it is possible shareholders seek compensation,’ he said.

‘In addition, there could be debate over whether the previous manager had been taking management fees on an inflated net asset value (NAV).’

Crighton also criticised the transaction cost of the Aqua Comms deal, which represent a ‘considerable 10%’ of the sale price. 

The analyst added: ‘Overall, this is a poor outcome and much worse than we had expected. The share price fell 25% to 15p on Friday. This can probably be recouped by the remaining assets. However, given the lack of visibility over the potential upside, which is highly uncertain at this point, we retain our “neutral” recommendation.’