Global financial firms continue to acquire in data center platforms, bringing more capital into the digital infrastructure sector.
Manulife Investment Management announced Friday that it has agreed to acquire a controlling interest in Serverfarm, a data center developer that operates eight data centers and 1.5 million square feet of space across North America, Europe and Israel. The investment by Manulife IM, together with support from existing shareholders, will provide funding for Serverfarm to continue its expansion and "capitalize on attractive market opportunities."
Investors remain focused on the market for digital infrastructure, citing extraordinary demand for capital to fuel the data economy. Interest in data centers has been boosted by the growth of hyperscale computing, and most recently by the potential for AI and automation to change business.
Serverfarm launched in 2009 as the data center development arm of the Red Sea Group, an investment group based in Israel. Led by founder and CEO Avner Papouchado, Serverfarm has focused on data center management as a service (DMaaS), using its proprietary InCommand software, which uses machine learning to monitor infrastructure and provide remote management.
Manulife IM is the global wealth and asset management arm of Canadian insurance giant Manulife. Its acquisition of Serverfarm continues a trend in which global investors like Blackstone, KKR, EQT Infrastructure and Macquarie have bought large data center platforms.
“Avner and the Serverfarm team have built a high-quality data center portfolio and growth platform that is well-positioned to capitalize on the strong secular tailwinds in the data center market,” said Recep Kendircioglu, global head of infrastructure, Manulife Investment Management. “We are excited about the company’s future and our ability to support Serverfarm through its next phase of growth on behalf of our clients.”
“Partnering with Manulife Investment Management, an investor that shares Serverfarm’s vision for growth and customer service, will allow us to effectively address the next wave of demand from our existing and new customers,” said Papouchado. “Our new relationship with Manulife Investment Management provides Serverfarm with additional expertise and new capital to execute on a number of attractive development opportunities and give our customers a long-term growth runway.”
Merger and acquisition activity in the data center remained near record levels in 2022, with 187 transactions at a total deal value of $48 billion, according to Synergy Research Group. That was just shy of the record-setting $49 billion in deals that closed in 2021.
The acquisition is expected to close in the third quarter of 2023 after the satisfaction of customary closing conditions including the receipt of certain regulatory approvals.