Nelnet sells off 48% stake in service provider ALLO for $197 million

networking
SDC Capital Partners makes a $197 million equity investment in overbuilder Allo. (Pixabay)

Nelnet is selling off a 48% stake in overbuilder ALLO to SDC Capital Partners. The $197 million equity investment is expected to close this month once it passes closing conditions.

ALLO will use the investment to build out its fiber network to more communities across the Midwest. The proceeds from the transaction, along with new third-party debt financing that's expected to be obtained by ALLO, will also be used to partially redeem outstanding senior preferred interests held by Nelnet.

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Five years ago, Nelnet acquired 92.5% of the outstanding equity and membership interest of ALLO for $46.2 million. Since then, Nelnet said it has invested significant additional capital in ALLO to build networks in Lincoln, Hastings, Imperial, and Norfolk, Nebraska and Fort Morgan and Breckenridge, Colorado in order to provision 1-Gig speeds.

As of June 30, ALLO's team has served more than 53,000 residential subscribers and thousands of businesses as well as governmental entities across 12 communities. ALLO provides broadband, telephone, and video solutions to businesses, residents, and governmental entities across its fiber networks.

With remote workforces and online learning, bringing more broadband services to rural communities has taken on added importance during the coronavirus pandemic.