Wall Street continues to pour money into the data center sector, as the growth of the digital economy attracts investment dollars. Investor interest in data infrastructure has remained strong through the COVID-19 pandemic, which has
Goldman Sachs is the latest Wall Street heavyweight to make a big play in digital infrastructure, investing $500 million to create Global Compute Infrastructure LP, a new data center development platform. The new venture will be led by industry veteran Scott Peterson, previously a co-founder and Chief Investment Officer at Digital Realty, the largest operator of wholesale data centers.
Global Compute plans to invest $1.5 billion in acquiring and developing data center facilities around the world, targeting industries that are seeing strong data growth.
“We see a tremendous opportunity in the data center space driven by increasing computing and storage demand and we believe the Global Compute team, backed by the global resources of Goldman Sachs, is uniquely positioned to deliver world class solutions to meet that demand,” said Leonard Seevers, Managing Director at Goldman Sachs.
Goldman Sachs is an experienced player in the data center sector as an investor and advisor, but its backing of Global Compute reflects a more active approach to the sector. Goldman’s entry is the latest in a series of huge investments in the sector by global investors with distinguished pedigrees. This trend speaks to the maturity of the data center industry, which has evolved into a real estate asset class offering excellent tenant credit quality – particularly in the wholesale data center business – as well as strong returns.
Management talent is also an important part of the story. The data center industry is now more than 20 years old, with a ready pool of seasoned executives that allow investors to assemble skilled teams to operate their platforms.
Here’s a look at some of the recent entries by well-heeled global investment firms:
- GI Partners has lined up $1.8 billion in investor backing for its Data Infrastructure Fund and will fund digital infrastructure primarily in North America.
- KKR has formed Global Technical Realty (GTR) to develop more than $2.5 billion in data centers across Europe.
- Stonepeak Infrastructure announced the creation of Digital Edge to invest $1 billion in digital infrastructure across the Asia-Pacific region. Stonepeak also owns Cologix, a colocation and interconnection firm in North America.
- Bain Capital has taken Chindata Group Holdings public through a $540 million IPO on the NASDAQ.
- Macquarie Infrastructure Partners (MIP) has made a strategic investment in Aligned Energy to support the company’s growth, including expansion into new markets and supply chain innovation. Macquarie is also the majority owner of carrier hotel development specialist Netrality Data Centers.
- Brookfield Infrastructure Partners acquired Evoque Data Center Solutions, and hopes to be an active player in the global merger scene for digital infrastructure.
- Colony Capital is developing platforms for the wholesale data center market (Vantage Data Centers) and edge computing (DataBank)
- Global infrastructure fund EQT Infrastructure has acquired EdgeConneX, which has been a leading player in both edge computing and hyperscale data center markets.
- Singapore’s sovereign wealth fund GIC has backed data center plays across three continents, including EdgeCore Internet Real Estate in the US and the Equinix xScale hyperscale initiative in Europe.
- Mubadala Investment Company, the sovereign wealth fund for the Emirate of Abu Dhabi, will invest $500 million to work with majority shareholder Stonepeak to support an ambitious growth strategy for Cologix.
- Global infrastructure investor Alinda Capital Partners is providing up to $1 billion in funding for future data center construction for QTS Data Centers.
- IPI Data Centers formed STACK Infrastructure with assets acquired from Infomart Data Centers and T5.
As we noted last year, these investors are raising billions of dollars to invest in digital infrastructure, citing extraordinary demand for capital to fuel the data economy. Investment interest in data centers has been boosted by the growth of hyperscale computing, where the tenant is a giant corporation with excellent credit, lowering the risk profile for investors.
A Closer Look at Global Compute
Goldman Sachs is making the investment in Global Compute through its Merchant Banking Division (MBD), which is one of the leading private capital investors in the world with investments across private equity, infrastructure, private debt, growth equity and real estate. MBD has initially committed to fund up to $500 million of equity capital to enable approximately $1.5 billion in near-term investments deployed across North America, Europe, Asia Pacific and Latin America.
Global Compute says it will both build and buy data centers, focusing on geographies with “strong secular tailwinds and potential for significant data infrastructure growth.”
CEO Scott Peterson has more than 18 years of data center industry experience and over 30 years in real estate investment. During his tenure at DLR from 2004 to 2018, Peterson led all investment activity and was responsible for $17 billion in total deal volume across both M&A and organic development. Several other former Digital Realty executives joining Peterson on the Global Compute team. COO Christopher Kenney was also a Digital co-founder, while Stephen Taylor will be Head of Europe after holding a similar post at DLR.
“Goldman Sachs is the perfect partner for us as we pursue global investment opportunities in the data infrastructure space,” said Peterson. “Our combined global pedigrees and networks, together with GS MBD’s access to ample growth capital, will allow the Global Compute platform to not only serve the critical needs of our customers around the world, but also create and unlock value for our partners.”
Last week Global Compute made its first acquisition, buying leading Polish data center provider ATM from a consortium of funds managed by MCI Capital and Mezzanine Management. ATM is headquartered in Warsaw, and provides Global Compute with access to the rapidly growing Central and Eastern European data center market.