One of the most experienced investors in the data center sector has raised a large fund and is ready to go shopping. GI Partners today said it has lined up $1.8 billion in investor backing for its Data Infrastructure Fund.
In a sign of the huge investor interest in digital infrastructure, the fund was initially targeted to raise $1.25 billion, but was expanded after it was initially oversubscribed. The fund closed today, but has already made several investments.
GI becomes the latest large investor to create an investment vehicle to purchase data centers and other digital infrastructure. Digital Colony (part of Colony Capital) raised a multi-billion fund last year, while KKR is putting 1 billion behind Global Technical Realty to invest in European data centers, and Stonepeak Infrastructure last week announced the creation of Digital Edge to invest $1 billion in digital infrastructure across the Asia-Pacific region.
Smart Money with a Data Center Pedigree
GI Partners is a veteran player in the sector, operating 27 data centers as well as colocation provider Flexential, which targets second-tier markets. It is perhaps best known for its sponsorship of Digital Realty Trust, which was created using data center assets that GI Partners at a deep discount during the “dot-com bust” in the early 2000s. GI Partners also has a lengthy list of private equity investments wioth successful exits, including The Telx Group, The Planet, SoftLayer Technologies, ViaWest, and Wave Broadband.
The GI Data Infrastructure Fund will target its investments in four digital infrastructure sub-sectors: data centers, data transport, wireless access, and “tech-enabled infrastructure,” primarily in North America. The is led by former Equinix CEO Steve Smith and Mark Prybutok, an experienced data infrastructure investor.
“Since founding Digital Realty in 2001, GI Partners has always believed in the fundamentals that drive the digital economy, which is now essential to our daily lives,” said Rick Magnuson, Founder and Executive Managing Director of GI Partners. “We are delighted to have a dedicated fund and experienced team led by Mark and Steve, which will build on and strengthen our long-standing position in the data infrastructure space.”
Looking at the Edge Opportunity
The fund will target growth opportunities in edge computing. “A core thesis of our Fund is to invest in elements of infrastructure closer to the end-user that will support both existing needs, as well as the next generation of critical applications utilizing 5G technology, private networks, the Internet of Things, machine learning, and other innovations,” said Prybutok.
Smith spoke about the fund’s goals during a panel at the PTC 2020 conference in Hawaii in January.
“We’re headed toward more distributed computing,” said Smith. “I think we’re at the start of seeing more compute and storage being deployed into secondary and regional markets. They need broadband and data center capacity, and I think there will be a lot more capacity pushed out to these communities. I think this is going to bring a lot of opportunities.”
In a press release announcing the fund, Smith noted how the COVID-19 pandemic has heightened awareness of digital infrastructure. “Technology and communications are the largest and fastest growing drivers of the global economy and the infrastructure that supports these sectors is critical to the operation of every business, government, and household in the developed world,” said Smith. “The disruption we have all experienced in 2020 due to the global pandemic has only served to underline the importance of data infrastructure to everyone’s life.”
GI Data Infrastructure’s diverse global investor base representing 11 countries includes sovereign wealth funds, pensions, financial institutions, investment management firms, foundations, and family offices. The fund was activated in January 2020 when it invested in DR Fortress, the premier data center business in Hawaii. In June 2020, the fund acquired Blue Stream Fiber, a high-speed broadband provider in Florida.