IMCO to Invest Up to US$450 Million in DataBank
The Investment Management Corporation of Ontario (IMCO) is to invest up to US$450 million in DataBank,
The Canadian company this week announced it has signed an agreement to invest in the company as part of DataBank’s recapitalization process, announced in June 2022 by DigitalBridge. Closing of the transaction is anticipated to be in Q4 2022.
“Investing in high-quality companies and markets with secular growth is key to delivering attractive risk-adjusted returns for our clients. DataBank’s leadership position in digital infrastructure and experienced management team makes it an ideal investment for our infrastructure portfolio,” said Rossitsa Stoyanova, Chief Investment Officer, IMCO. “We look forward to partnering with DataBank’s management and our co-shareholders to execute the company’s business plan.”
In June, DigitalBridge announced that affiliates of Swiss Life Asset Management AG and EDF Invest would be acquiring 27 percent of DataBank for approximately $1.2 billion in cash from existing investors including DigitalBridge. Later, Northleaf Capital Partners and Ardian also joined the round, taking the acquisition value to $1.5 billion.
“We are honored to have an outstanding partner such as IMCO join DigitalBridge, Swiss Life Asset Managers, and other marquee investors to catalyze the next phase of growth at DataBank, North America's leading edge infrastructure platform,” said Kevin Smithen, Chief Commercial and Strategy Officer, DigitalBridge.
Operating at arm’s length from the government, IMCO serves public-sector institutions with investment management services, managing more than $ 79 billion on behalf of public sector clients, mainly for pensions. Clients include the Ontario Pension Board (OPB) and the Workplace Safety and Insurance Board (WSIB). It has previously invested in European fiber firm euNetworks.
At the time of the recapitalization announcement, DataBank said DigitalBridge remains vested in the company as a “committed, long-term investor who will enable DataBank’s aggressive plans for the decade ahead.” The company said the recapitalization will enable it to execute a plan that builds upon its data center footprint and “capitalize on Edge infrastructure growth in the US for the next decade.”
IMCO released a press release announcing it signed an agreement to invest up to US$450 million in DataBank:
IMCO announced today it has signed an agreement to invest up to US$450 million in DataBank, the largest edge infrastructure operator in the U.S. IMCO joins other new investors in DataBank’s recapitalization process, which was announced in June 2022 by DigitalBridge Group Inc (“DigitalBridge”).
DataBank enables the world’s largest enterprises, technology, and content providers to deploy and manage their mission-critical applications and data across its nationwide platform. DataBank’s portfolio consists of 65+ operational data centers across 27+ markets with a diverse customer base. The company is well-positioned to capitalize on the significant future growth in digital infrastructure as cloud, content, and technology –especially –5G, push towards the edge of networks.
“Investing in high-quality companies and markets with secular growth is key to delivering attractive risk-adjusted returns for our clients. DataBank’s leadership position in digital infrastructure and experienced management team makes it an ideal investment for our infrastructure portfolio,” said Rossitsa Stoyanova, Chief Investment Officer, IMCO. “We look forward to partnering with DataBank’s management and our co-shareholders to execute the company’s business plan.”
“We are honoured to have an outstanding partner such as IMCO join DigitalBridge, Swiss Life Asset Managers, and other marquee investors to catalyze the next phase of growth at DataBank, North America's leading edge infrastructure platform,” said Kevin Smithen, Chief Commercial and Strategy Officer, DigitalBridge.
Closing of the transaction is anticipated to be in Q4 2022.
About IMCO
The Investment Management Corporation of Ontario (IMCO) manages $79.0 billion of assets on behalf of its clients. IMCO’s mandate is to provide broader public sector institutions with investment management services, including portfolio construction advice, better access to a diverse range of asset classes and sophisticated risk management capabilities. IMCO is an independent organization, operating at arm’s length from government. Follow us on LinkedIn and Twitter @imcoinvest.
You can read more about Databank below:
DataBank gives enterprises, technology, and content providers the confidence of knowing their applications and data are always secure, always compliant, and always deployed on the right edge infrastructure.
Whether you are a hyperscale cloud or content provider, a next-generation network operator, or an enterprise seeking a hybrid IT strategy, your IT infrastructure landscape is changing fast – becoming more software-defined, user-managed, and edge-focused. It demands a different kind of data center experience: one that has evolved beyond colocation to ensure your data and applications are always secure, always compliant, and always on the right platforms in the right places.
That’s the essence of the DataBank Data Center Evolved™ model.
Our edge infrastructure platform consists of 65+ data centers located within 100 miles of more than 60% of the U.S. population, modular/micro-data centers that can be placed beneath any 5G tower, and 20 major interconnect hubs that give your workloads unrestricted reach.
Across that edge platform, we provide everything from colocation and network, to cloud compute and storage, with contract portability that allows you to avoid lock-in to any one strategy. Then we surround it all with hands-on support, managed security and compliance services that liberate your staff and optimize your operations – all backed up with a 100% uptime guarantee, a Customer Portal that provides unmatched visibility and control of your infrastructure, and an operating culture that puts people first, takes extreme ownership, and delivers confidence through collaboration, precision, and communication.
That’s how we’re evolving the data center experience at DataBank: giving you complete peace of mind in your IT infrastructure, so you can focus on creating a limitless digital future for your business.
Back in June Databank announced a major recapitalization to continue expanding and to capture edge infrastructure demand over the next 10 years.
In late August, an investor consortium led by Swiss Life and EDF Invest acquired a 35% interest in DataBank for approximately $1.5B, completing the first phase of a major recapitalization.
At the time, David Seeley of Dallas Innovates wrote an in-depth feature on how Dallas-based DataBank sold a 35% stake for $1.5 Billion:
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.
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.)
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.”
‘Customer-focused, customer-driven’
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.”
Did you catch this part:
“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.”
IMCO now joins this group of marquee investors as part of the recapitalization process to catalyze the next phase of growth at DataBank, North America's leading edge infrastructure platform.
It's a sizable investment of up to US$450 million in a company that is well-positioned to capitalize on the significant future growth in digital infrastructure as cloud, content, and technology –especially –5G, push towards the edge of networks.
Today, DataBank has more data centers in more metros than any other provider in the US – public or private – with a footprint capable of putting customer workloads within 100 miles of 60% of the US population.
The recapitalization will enable DataBank to execute a plan that builds upon this industry-leading footprint and capitalizes on edge infrastructure growth in the US for the next decade.
For example, DataBank recently announced the opening of a sixth Salt Lake City data center:
Dallas, TX – September 26, 2022 – DataBank, a leading provider of enterprise-class colocation, connectivity, and managed services, announces the opening of its newest Salt Lake City data center, SLC6. The increased capacity meets the growing demand for mission-critical IT infrastructure in Utah and the Salt Lake City market.
The 171,000 square foot expansion adds 100,000 square feet of raised flooring – 50,000 of which will be available on day one. The project establishes two new data halls, expected to open in October of this year. Some 11 megawatts of power are available now with another 11 megawatts to come online in the future.
A grand opening event is slated for November 15. More information about the event will be released soon.
“Utah is quickly becoming one of the fastest growing tech hubs in the U.S.,” says Tony Qorri, DataBank’s vice president of construction. “The state’s prime real estate, low cost of living, and its deep technology talent pool, make it an ideal location for start-ups. Additionally, its internet speeds are among the fastest in the nation which is attractive to start-ups as well as enterprises.”
SLC6 resides on DataBank’s Granite Point Campus, strategically located between downtown Salt Lake City and Utah’s “Silicon Slopes” in Bluffdale. The 23-acre campus is tethered to DataBank’s SLC1 data center and carrier hotel by direct fiber and is ideal for West Coast workloads requiring a stable and scalable location.
SLC6 has been designed from the ground up with a full suite of customer amenities and all the security features needed to meet HIPAA, PCI-DSS, SSAE-18 SOC1 and SOC2, GDPR, and FISMA compliance requirements. The facility is adjacent to four other DataBank data centers on the Granite Point campus, providing convenience for customers looking to expand capacity and efficiently leverage existing staff and resources.
“Bringing this additional capacity to the Silicon Slopes deepens our roots in the region,” said Qorri. “This aligns well with DataBank’s growth strategy and our dedication to providing our customers with world-class IT infrastructure.”
The more you read about DataBank, the more you understand why IMCO invested a sizable sum to acquire a minority stake in it.
IMCO's CIO, Rossitsa Stoyanova, explains it well:
“Investing in high-quality companies and markets with secular growth is key to delivering attractive risk-adjusted returns for our clients. DataBank’s leadership position in digital infrastructure and experienced management team makes it an ideal investment for our infrastructure portfolio. We look forward to partnering with DataBank’s management and our co-shareholders to execute the company’s business plan.”
DataBank fits very nicely in IMCO's Infrastructure portfolio and I agree, it is an ideal investment for this portfolio.
It's all about getting the best possible risk-adjusted returns and digital infrastructure is a hot area for all investors right now.
Equally important, it also fits nicely with IMCO's ESG values.
In late May, DataBank became a founding member of the historic Infrastructure Masons (iMasons) Climate Accord to address climate change:
Dallas, TX – May 30, 2022 – DataBank, a leading provider of enterprise-class colocation, connectivity, and managed services, announced today it has become a founding member of the historic Infrastructure Masons (iMasons) Climate Accord, a groundbreaking agreement among key industry players to address climate change.
The iMasons Climate Accord (ICA) brings together over 70 companies including, DataBank, AWS, Google, Meta, Microsoft, and dozens of other key global companies, to accelerate the digital infrastructure industry’s journey to carbon neutrality. Members of the accord pledge to promote global carbon accounting of digital infrastructure. This heightened level of transparency is meant to simplify ESG performance reporting, a growing priority for corporations and investors.
“We are honored to be a part of this important initiative,” said Raul K. Martynek, Chief Executive Officer, DataBank. “When it comes to accommodating the growing demand for data-driven computing while minimizing the effects of climate change, we’re all in this together. It’s amazing to see these key players in the data center industry coming together to play a proactive role in shaping the best possible future.”
The ICA is the first agreement of its kind in the industry and is designed to make sustainable data center design, construction, and operation choices more transparent, effective, and cost-efficient, reducing the obstacles to adopting sustainable practices.
“This accord represents an unprecedented collaboration between leading digital infrastructure companies to accelerate our journey to carbon neutrality,” said Dean Nelson, Chairman and Founder of Infrastructure Masons. “We are combining forces to compound the efforts of these firms to make meaningful and sustained progress toward that goal.”
iMason’s vision for the ICA is to create an open standard of reporting carbon in data center materials and products, carbon intensity in power consumption, and a maturity model for reporting participant progress.
“It’s important for IT ecosystem partners to collaborate to enhance environmental responsibility,” said Martynek. “It is our responsibility as a collective industry to help sustain the earth for generations to come, and I believe that together, we can achieve net zero.”
The next step in the iMasons Climate Accord is to identify and establish an independent governing body to adopt or develop a standard methodology for measuring carbon in digital infrastructure and ensuring transparency.
DataBank facilities incorporate the latest modular designs and energy-efficient technologies available today and demonstrate the company’s commitment to building environmentally sustainable data center solutions.
For all these reasons, this is a great long-term investment for IMCO.
Lastly, let me congratulate Nick Chamie, Michael Lewis and Polina Sims for their recent appointments at IMCO. You can view the entire team of investment leaders here.
Below, why do DataBank customers choose DataBank? Learn more about the DataBank difference and why they're growing so fast.
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