DataBank Receives $185M Investment from Colony Capital

Colony Capital is supporting the data center provider through additional capital to potentially fund add-on acquisitions and greenfield edge data center developments.

DataBank investment

DataBank, the Dallas-headquartered provider of data centers, connectivity, and managed services, has received a $185 million equity investment from Colony Capital, a Los Angeles-based global investment management firm.

The investment signals a slight change in ownership. It was made via the purchase of secondary equity interests from existing investors Edgewater Funds and Allstate, according to a statement. Allstate is expected to retain 50 percent of its interests and continue as a DataBank investor, while Edgewater will fully exit its position.

Chicago-based investment manager Nuveen will hold on to its original stake and remain a major investor in DataBank, according to a statement.

This deal is said to be Colony Capital’s first direct balance sheet investment in digital real estate, which is when a company uses its own cash reserves to make an investment and show it as an asset on its balance sheet. This is also its first step in investing in the edge/colocation data center sector. 

Edgewater’s board member will step down and be replaced by Justin Chang, Colony’s global head of Private Equity.

“We look forward to having Colony Capital and its long-term investment vision behind DataBank as we continue to grow our platform,” Raul K. Martynek, DataBank’s CEO, said in a statement.

Including Dallas, DataBank operates 20 data centers in nine U.S.markets. The others are in Minneapolis, Kansas City, Cleveland, Pittsburgh, Salt Lake City, Baltimore, Atlanta, and Indianapolis.

Chang noted in a statement that the firm looked forward “to supporting the business with additional capital to fund potential add-on acquisitions and greenfield edge data center developments.”

In October, DataBank acquired Indianapolis-based LightBound, a colocation, internet, voice, network, and cloud services provider.

DataBank said at the time that with the acquisition of LightBound, it planned to expand its growing portfolio of edge data centers and added two enterprise-class facilities with the deal.

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