A 35% stake in DataBank—a Dallas-based leader of the booming data center market—has been sold for $1.5 billion to a new group of investors.
The deal was structured as a sale of ownership interests from some of DataBank’s existing investors. The new investor group is led by Swiss Life Asset Management, EDF Invest, Northleaf Capital Partners, and Ardian.
The new group joins DigitalBridge, which remains invested in the company. As of this writing, DataBank’s website lists investors including DigitalBridge, Nuveen (the investment manager of TIAA), CBRE Caledon Capital Management, Allstate Investments, and Dock Square Capital.
DataBank said it views the acquisition as “validation for the company’s plans to build upon its industry-leading footprint and capitalize on edge infrastructure growth for the next decade.”
Goldman Sachs served as DataBank’s financial advisor in the recapitalization, and Proskauer Rose LLP as its legal advisors.
‘A historic level of demand’ for data centers
The news of DataBank’s recapitalization follows a string of recent reports on the hot data center market.
In January, CBRE reported that the Dallas/Fort Worth data center market had a strong finish to 2021, “recording the most active quarter of leasing of all time.”
This week, JLL released its Global Data Center Outlook, which shows that the North Texas data center pipeline is facing “a historic level of demand”—and the same thing is happening in major metro areas around the world. (More on that report in this story.)
DataBank owns over 65 data centers and 20 interconnection hubs
Since 2016, DataBank has been building what it calls “an ecosystem” of over 65 data centers and 20 interconnection hubs in over two dozen Tier 1 and Tier 2 U.S. metros. Its goal has been to create the foundation of a more decentralized, next-generation internet infrastructure platform.
DataBank says it has “more data centers in more metros than any other provider in the U.S.—public or private” and the ability to put customer workloads “within 100 miles of 60% of the US population.”
DataBank CEO: Continuing ‘aggressive growth’ over next decade
“DataBank will continue its aggressive growth plan over the next 10 years,” CEO Raul Martynek told Dallas Innovates. “This new investor group will provide the financial backing required to continue to scale DataBank’s leading edge infrastructure platform.”
Seeing growing demand for connectivity—and a ‘long-term game’
Martynek sees several trends in the evolution of data centers.
“One of the most influential factors will be continued expansion to meet the growing demand for connectivity,” he said. “This aligns perfectly with our recent recapitalization, as Swiss Life and EDF’s long-term outlook is the same as DataBank’s—to capitalize in the significant opportunities around edge demand.”
An influx of long-hold, value-creation infrastructure investors will also be key to coming changes over the next several years, he added.
“The data center sector is a long-term game, as it requires large capital investments that only produce returns after several years,” Martynek said. “Because of this, infrastructure funds will prove to be excellent stewards of data center businesses.”
Sustainable energy takes a growing role
Another trend noted by Martynek: a greater focus on the use of sustainable energy by data centers.
“Transparency is a high priority for DataBank, and it’s one of the reasons DataBank became a founding member of the iMasons Climate Accord this year,” he said. “This initiative is extremely important because when it comes to minimizing the effects of climate change, we’re all in this together. It’s great to see the big players in the data center industry coming together to take a proactive role in climate preservation.”
Martynek attributes DataBank’s success to its customer focus.
“DataBank’s roots as a customer-focused, customer-driven organization permeate our DNA, even as we grow,” he said. “We look for this in our hiring practices and use it in our employee evaluations.”
Customers typically join the company by contracting for a single service, Martynek said, before expanding into more robust infrastructure partners. “In fact, most of our revenue comes from repeat and expanded business from current customers,” he said.
Further recapitalization and new investors are expected through Q4
Databank says it expects additional stages of the recapitalization will result in “incremental new investors acquiring ownership interests in DataBank from existing investors prior to the anticipated completion of the recapitalization in the fourth quarter of 2022.”
JLL: ‘Demand for cloud anticipated to grow exponentially’
This week’s JLL report spotlights several data center trends, including:
“New data center supply will be impeded by the availability of land and power in many major markets, driving expansion outside the traditional hubs.”
“Persistent supply chain delays will continue to cause delivery challenges for the next 24 months.”
“Enterprise demand for cloud is anticipated to grow exponentially as businesses move from owned assets to either full cloud or hybrid models.”
“Sustainability will be a key focus for the sector as net zero carbon mandates proliferate across the public sector.”
“Capital will continue to flow into the sector through private equity and real estate investment.”
Quincy Preston contributed to this report.
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