Digital storage: 6 PE-backed deals involving data centers

Over the past few years, data centers have become a popular investment category for private equity firms. In the past two months, PE Hub and PE Hub Europe have seen a slew of deals thanks to the increase in use of data centers by a variety of industries.

Here’s six deals involving data centers that you can store inside your memory bank, listed in reverse chronological order:

1. GI Partners shoots for two, taking majority stakes in a couple of Illinois hyperscale data centers

In July, Scottsdale, Arizona-headquartered GI Partners acquired a 65 percent stake in two hyperscale data centers located in Elk Grove Village, Illinois. No financial terms were disclosed.

The deal was done in partnership with Austin, Texas-based Digital Realty Trust which is retaining a 35 percent stake and will continue to manage the day-to-day operations of the properties. GI Partners made the investment on behalf of its Essential Tech and Science Fund.

2. KKR Buys CoolIT in May and company receives investment later in July

Back in May, New York City-headquartered PE firm KKR acquired CoolIT, a Calgary-based provider of scalable liquid cooling solutions for the data center and desktop markets. No financial terms were released for the deal at the time, which was expected to close in the second quarter of 2023.

Two months later in July, Abu Dhabi-based sovereign wealth fund Mubadala invested in CoolIT. No financial details of the transaction were disclosed.

“By combining our manufacturing and decarbonization expertise with CoolIT’s track record of product innovation, we expect to further scale its best-in-class direct liquid cooling solution to meet the anticipated demand for higher density, more energy efficient data centers,” Evan Kaufman, a director at KKR, said in a statement.

3. Brookfield and Ontario Teachers’ team up on Compass Centers acquisition

In June, Toronto, Canada-based Brookfield Infrastructure Partners and existing investor Ontario Teachers’ Pension Plan acquired Compass Datacenters, a Dallas, Texas-based developer and owner of wholesale data center facilities.

In the deal, New York City-based private equity firm RedBird Capital Partners and Israel-based real estate and holding company Azrieli Group were sellers. The deal is expected to close by year’s end.

“Digitalization remains a key thematic investment for Brookfield Infrastructure,” said Sam Pollock, CEO of Brookfield Infrastructure, in a statement. “The need for data storage continues to grow at an exponential rate across the globe.”

4. Apollo makes structured investment in Yondr Group

Also in June, New York City-headquartered Apollo Global Management made a structured investment in Yondr Group, a global developer, owner, operator and service provider of data centers, primarily in Europe and the Americas. Terms of the deal were not disclosed.

Based in Amsterdam, the Netherlands, Yondr Group is wholly owned by Houston, Texas-based Cathexis Group, a single member family office.

“With increasing global demand for hyperscale data center capacity, we believe that nimble, proven build-to-suit players like Yondr are well positioned for sustainable growth,” said partners at Apollo Global Management and new Yondr board of directors members Trevor Mills and Patrick Kirby.

5. PE-backed Data Clean acquires SML Enterprises

In another deal in June, Des Plaines, Illinois, Data Clean acquired Bristow, Virginia-based SML Enterprises, a critical environment cleaning business serving data centers across the Mid-Atlantic region.

Data Clean is backed by Santa Monica, California-based private equity firm Angeles Equity Partners. No financial terms were disclosed. Data Clean was originally acquired by Angeles in November of 2022.

“The strategic fit between Data Clean and SML is ideal and a great first step towards executing our strategy of further consolidating the critical environment contamination control space,” said Frank Spelman, managing director at Angeles in a statement. “As the data center sector continues to grow, the essential nature of keeping those facilities free from contaminants will only increase.”

6. I Squared’s nLighten acquires Euclyde Data Centers

Also in June, Miami, Florida-based I Squared Capital’s digital infrastructure platform nLighten acquired Euclyde Data Centers as a nLighten via its ISQ Global Infrastructure Fund III. Terms of the deal were not disclosed.

Headquartered in Antibes, France, Euclyde has six carrier-neutral data centers in Sophia Antipolis, Lyon, Strasbourg, Besançon and Paris.

“Euclyde is an excellent fit with our strategy, and the existing management team, employees and assets are a solid base for our ambitions in France,” said Harro Beusker, co-founder and CEO of nLighten.

With data becoming ever more important to business, we expect to see more of these investments in the months ahead.