EdgeCore Digital Infrastructure was one of the first new platforms of the current data center building boom, launching in 2018 with an experienced management team, global investors with deep pockets, and plans to build huge campuses in leading data center markets.
The journey has come full circle for EdgeCore, which announced Friday that it has been acquired by Partners Group, which said it will invest $1.2 billion to acquire EdgeCore and its existing data center assets, and "fund the acquisition and development of data centers in new markets."
Partners Group, which is based in Switzerland, says it plans to "scale EdgeCore well beyond the initial commitment and target markets."
“EdgeCore represents a compelling opportunity to deepen and broaden our digital infrastructure assets and capabilities," said Ed Diffendal, Managing Director and Co-Head of Private Infrastructure in the Americas. for Partners Group. "We are excited to scale EdgeCore, and we believe its strong portfolio of data center sites and advanced pipeline of shovel-ready assets in strategically important markets should enable rapid growth.
Investors Remain Hot on Data Centers
The EdgeCore acquisition continues the wave of M&A action in the data center industry, building on $47 billion of transaction value already in 2022. The Partners-EdgeCore investment should put 2022 very near the industry record for annual M&A of $49 million from 2021, according to Synergy Research.
The deal will bring new energy to EdgeCore, which has moved at a deliberate pace in a market where other new platforms have grown rapidly. The company operates data center campuses in Ashburn in Northern Virginia, and in Mesa in the Greater Phoenix market. The company also owns a prime parcel in Santa Clara, the leading cloud hub in Silicon Valley, as well as Reno, Nevada.
“The EdgeCore team strongly believes that Partners Group brings value-add dynamics that support the growth of the EdgeCore platform and enhance the data center infrastructure and services we provide to our customers," said Tom Ray, CEO and Executive Vice Chairman of EdgeCore: ."Joining forces with a value-add team was a key goal in our recapitalization of EdgeCore, and Partners Group brings both tremendous capabilities and a strong ethos around creating added value in its portfolio companies by fostering collaboration.”
Investor interest in digital infrastructure has remained high, despite the current challenges facing the global economy, which include supply chain woes, a war in Europe, and the COVID-19 pandemic. The reason: Experienced investors perceive data centers as one of the best ways to make money. Large global investors see a compelling opportunity to gain strong returns by investing in the infrastructure to power the digital economy.
Virtually every business is racing to keep pace with the shift to a digital economy, and all these trends require infrastructure. Data centers are central to this vision. That’s why the world’s marquee tech companies are adding data center capacity at an unprecedented rate. Building new data centers requires LOTS of capital, and after many years of wariness about the sector, the investment community is keen on funding cloud infrastructure.
EdgeCore Offers Growing Footprint, Operating Experience
That includes Partners, which last year acquired atNorth, which operates nearly 100 MW of capacity in Iceland, all supported by renewable energy.
"One structural trend that underpins our approach to the market, is the ongoing densification of digital infrastructure," Partners wrote in its private markets outlook for 2021. "COVID-19 has sharpened the focus on the utility-like characteristics of digital infrastructure, and network densification and upgrades are key to meeting fast-growing data consumption globally. "
EdgeCore provides Partners with an experienced management team, existing facilities and customers, and several shovel-ready sites for expansion.
"EdgeCore has strong infrastructure characteristics and is set to benefit from structural tailwinds across the data center sector," said Fentress Boyse, Member of Management, Private Infrastructure Americas, Partners Group. "Businesses continue to scale and move existing workloads to leverage outsourced models such as those offered by cloud service providers and scaled data center infrastructure providers.
"EdgeCore is a market leader poised to accelerate scaling to serve its customers in existing and new markets," Boysde added. "Our value-creation plan aims to continue to build a best-in-class sustainable digital infrastructure platform serving the world’s most demanding customers."
Ray is one of the most experienced executives in the data center sector. As a managing director at The Carlyle Group, in 2001 Ray helped create the CRG West colocation business, which later became CoreSite and went public through an IPO. He retired as CEO of CoreSite in 2016.
EdgeCore's original financial backers included GIC, the sovereign wealth fund for the government of Singapore. along Ray's Mount Elbert Capital Partners and OPTrust, one of Canada’s largest pension funds.
EdgeCore's development approach, which we profiled in a tour of its Phoenix-area campus, focuses on efficiency. EdgeCore makes extensive use of off-site construction, including modularized power rooms that attach to the exterior wall of the building. The multi-story design makes efficient use of land, while the power chain takes advantage of pre-fabricated construction.
EdgeCore is using lithium-ion batteries in its UPS (uninterruptible power supply) systems, reflecting the recent shift away from the lead-acid batteries that have long been a stable of data center UPS rooms. For its cooling system, EdgeCore is using air-cooled chillers, an approach that uses very little water, a key consideration in regions like the SouthWest.
Partners says it wants to bring EdgeCore to new markets. Which geographies may get a look? It's worth noting that EdgeCore initially wanted to build a campus in the Dallas/Fort Worth market, which has seen record activity and may soon be facing supply constraints.
