Partners Group is snatching up digital transformation players in the US and Europe

Partners Group is acquiring EdgeCore Digital Infrastructure.

Good morning, Hubsters. MK Flynn here with today’s Wire.

Hope you had a good weekend.

I’ve got a big-picture trend on my mind this Monday morning.

Digital transformation has been a key theme this year for many companies, and PE Hub has seen a slew of deals benefiting from the trend.

Today, let’s take a close look at one private equity firm that has been particularly active in acquiring companies that are involved in helping their customers with digital transformation.

Shifting IT infrastructure. Partners Group has been making deals along that strategy all year, snatching up targets in both the US and in Europe.

On Friday, the PE firm, which has regional headquarters in Baar-Zug, Switzerland, Denver and Singapore, announced the acquisition of EdgeCore Digital Infrastructure, a Broomfield, Colorado-based builder and operator of data centers in the US.

Partners said will invest up to $1.2 billion to fund the acquisition and buildout of data center sites.

“EdgeCore has strong infrastructure characteristics and is set to benefit from structural tailwinds across the data center sector,” Fentress Boyse, member of management, private infrastructure Americas, Partners, said in a statement. “Businesses are increasingly shifting IT infrastructure to scaled outsourced cloud service provider data centers, which have more efficient power and cooling capabilities. The company is at an inflexion point in its growth journey and our transformational value creation plan aims to build a best-in-class sustainable digital infrastructure platform for the largest demand users in this market.”

Global dealmaking. Also on Friday, Partners announced it bought a controlling stake in Munich-based Cloudflight, a digital transformation services provider, from Deutsche Beteiligungs. The deal gave an enterprise value of around $400 million.

Cloudflight develops software to help firms digitize their businesses. It focuses on aiding long-term projects, using fields such as internet of things, cloud architecture, machine learning and artificial intelligence. It has more than doubled its revenues over the last three years.

Earlier in the year, Partners bought Version 1, a Dublin-headquartered digital transformation services provider, from Volpi Capital. Version 1’s services include application modernization, cloud migration services, and cloud-native software engineering, which involves developing applications in the cloud.

Earlier in November, PE Hub Europe’s Nina Lindholm spoke with Kim Nguyen, co-head of Partners’ private equity services business, about the trend toward digitization.

Here’s an excerpt from that interview:

What is digital transformation and how does it aid value creation?
Digital transformation is a specific value creation type amongst the digital value creation playbook. It can mean a major transformation, or in some cases you only digitalize some of the processes within your value chain. It is primarily about going into your value chain and breaking down your processes into single steps. Then you think about each step and what digitization can do to that specific process.

Usually, the two main benefits are reducing the cost position and increasing revenues. Through digitalization, you can improve the way you interact with your clients and as a result, improve customer satisfaction. You can also find new services that you can sell to your clients through digitization, or get better access to markets, like through e-commerce.

Which sectors are especially experiencing tailwinds from digital transformation?
All sectors can benefit from digital transformation. The emphasis varies between sector and company. In services, for example, it is all about client satisfaction to ensure sustainable organic growth. Hence, automation of manual, low value-added activities is a key enabler to free up time of client facing front-office roles and to redirect the focus on satisfying client needs. This, combined with user experience and interface design, can lead to significant benefits on revenue and the cost side. This is what we have been doing with our portfolio company Emeria.

In the consumer sector, new revenue streams can be accessed through digitalization such as new sales channels or digital content, which can support the generation of additional revenue. In the health and life sector, digitalization can make certain processes in care delivery more efficient and hence help take cost out of healthcare systems.

For more from the interview, including Nguyen’s take on which sectors are falling behind in digital transformation, read the whole story on PE Hub Europe.

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That’s it for today. I’ll be back with more tomorrow.

Happy dealmaking until then,

MK