Cologix, an interconnection-focused data center operator backed by Stonepeak Infrastructure today announced it has agreed to acquire vXchnge’s CA-01 data center campus in Santa Clara, California for $58.1m, which it will rename as SV1. Specifically, Cologix’s purchase encompasses an existing 84k sqft data center, with 9 megawatts of power capacity. Additionally, the Santa Clara (also known as Silicon Valley) campus can grow to 218k sqft of data center space, adding a further 10 megawatts of power capacity, to reach 19 megawatts of power capacity at full build-out.
Cologix’s acquisition of vXchnge’s CA-01 campus will be funded through a combination of equity from Mubadala Investment Company, and additional debt. Notably, in September 2019, Cologix secured a $500m equity commitment from Mubadala, an Abu Dhabi-based investment firm.
vXchnge has the backing of Stephens Group, a family-owned private equity firm, which has been an investor in the company since 2010. Notably, Stephens Group is also an investor in retail colocation data center operator TierPoint.
Finally, Cologix’s acquisition of the vXchnge facility is expected to close in early Q2 2021.
Transaction Rationale – Cologix Acquires vXchnge Campus
vXchnge’s CA-01 site in Santa Clara serves as a network-dense interconnection hub, with a strong ecosystem of fiber-based carriers, cloud, and software companies. In turn, this facility allows Cologix to expand its national interconnection footprint into Silicon Valley, with an established interconnection hub. Indeed, prior to today’s announcement, Cologix did not operate a major interconnection hub on the West Coast of the U.S.
Overall, one of Cologix’s strategic goals has been to provide complete coverage of the U.S. markets with cloud gateways. To-date, the company has established cloud gateways in Ashburn, Dallas, Minneapolis, New Jersey, Jacksonville, and Columbus, in the United States. Additionally, Cologix is a significant interconnection provider in Canada with key cloud gateways in Toronto, Montreal, and Vancouver.
Cloud On-Ramp Integration
As part of integrating the vXchnge facility into Cologix, customers of this campus will gain access to additional cloud on-ramps. Specifically, Cologix will facilitate on-demand connectivity, at vXchnge’s Santa Clara site, to cloud on-ramps including AWS Direct Connect, Azure ExpressRoute, Google Cloud Interconnect, Oracle FastConnect, and IBM Cloud Direct Link.
Cologix’s agreement with vXchnge represents the second recent agreement between the two companies. Indeed, in August 2020, Cologix agreed to acquire vXchnge’s 16k sqft data center in Minneapolis, Minnesota. Therefore, Stonepeak Infrastructure, Cologix’s controlling shareholder, is also doing repeat business with Stephens Group, vXchnge’s key shareholder.
Santa Clara, California (Silicon Valley) – Market Overview
Santa Clara (also known as Silicon Valley) is the second-largest interconnection hub globally. The market is characterized by having strong fiber connectivity to Internet backbones and a growing density of hyperscale on-ramps. Indeed, fiber connects technology businesses in San Francisco to the north, with the concentrations of data centers south of San Francisco Bay, in Santa Clara and San Jose.
Additionally, Santa Clara’s location is in close proximity to major cloud and artificial intelligence companies with high-density compute workloads. Of paramount importance for customers with high-density compute workloads, is Santa Clara’s lower power pricing costs.
Santa Clara, as a market, derives its power from the municipal utility, Silicon Valley Power. Specifically, this utility provides a 25% to 40% lower cost of power than surrounding municipalities.