Digital 9 Infrastructure, a private equity firm, today announced it has completed the acquisition of Verne Global (Verne Holdings Limited), a data center operator in Iceland, at a valuation of £231m ($320m) in cash. Verne Global’s prior shareholders were Novator Partners and General Catalyst Partners, as well as co-investors Wellcome Trust and Stefnir.
Digital 9 Infrastructure is valuing Verne Global, which generates ~£11.5m of contracted, run-rate EBITDA, at ~20x EBITDA. Additionally, the company will generate a cash yield of 7%+ for Digital 9 Infrastructure’s portfolio.
Finally, Digital 9 Infrastructure’s financial advisor was RBC Capital Markets.
Verne Global – Overview
Verne Global operates one data center in Iceland which is located on a 40-acre campus, next to Keflavik International Airport, on the Reykjanes peninsula. Specifically, the facility sits on a former NATO site near the town of Keflavik, Iceland, which is located ~30 miles (48 kilometers) from Reykjavík, the capital of Iceland.
Overall, Verne Global’s data center campus will have 24 megawatts of constructed power capacity by December 2021.
Verne Global has the potential to expand its existing data center campus on its 40-acre site, as well as increase its on-site power availability. To this end, the company currently has 8 megawatts of power capacity under development.
Verne Global’s data center campus is located near two subsea cable landing stations. In turn, this allows the company to offer direct, high-capacity connectivity to the United States and Europe, as well as to public cloud service providers.
Furthermore, a new 1.3k mile (2.1k kilometer) subsea cable, Celtic Norse, which connects to the nearby town of Grindavik will be ready for service in 2022. The owners and operators of this subsea cable are Celtic Norse AS, Sýn (Vodafone Iceland), and Aqua Comms. Notably, Aqua Comms is a Digital 9 Infrastructure portfolio company (see below).
Verne Global delivers 100% of its power from local renewable energy sources, including hydroelectric and geothermal. Additionally, in terms of energy efficiency, the company has a low power usage effectiveness (PUE) rating by using Iceland’s year-round low ambient temperatures for free-air cooling.
Finally, Iceland offers low-cost power, with its utility rates equivalent to USD ~$0.05 per kWh.
Verne Global serves high-performance compute (HPC) companies, supercomputing, and enterprises. All of these companies run high-density workloads, meaning 20+ kilowatts per server cabinet. Specifically, Verne Global serves companies in a variety of sectors including automotive and artificial intelligence & machine learning.
Digital 9 Infrastructure – Portfolio and Pipeline
Digital 9 Infrastructure, through Iceland’s Verne Global, is adding its first data center business to its investment portfolio. Presently, Digital 9 Infrastructure has made investments in subsea cable operators and infrastructure, including Aqua Comms and EMIC-1.
To-date, Digital 9 Infrastructure has raised total equity of £475m (gross proceeds). Particularly, the company raised £300m via IPO in March 2021 and added a subsequent £175m through an equity placing in June 2021.
Capital Deployed and Committed
Following today’s announcement, Digital 9 Infrastructure has deployed and committed £423.1m of equity to Aqua Comms, EMIC-1, and Verne Global. Therefore, the firm’s net proceeds from its equity raises have been substantially invested. As a result, Digital 9 Infrastructure intends to undertake a further equity raise in the near-term.
Pipeline – Total
Digital 9 Infrastructure has identified a 12-month pipeline of £1.85bn of opportunities. Indeed, these investments also require further capital expenditures to execute their longer-term business plans. The firm’s breakdown of its total pipeline is as follows:
- Towers and Small Cells (Wireless): £365m, equivalent to 20% of its pipeline
- Data Centers: £350m, equivalent to 19% of its pipeline
- Fiber (Terrestrial): £625m, equivalent to 34% of its pipeline
- Subsea Cables: £510m, equivalent to 27% of its pipeline
Geographically, these opportunities are primarily in the UK, the Nordics, the Middle East, North America, and Asia-Pacific.
Pipeline – Near-Term
Of Digital 9 Infrastructure’s total pipeline, the firm has £670m+ of near-term opportunities, £120m of which the company has secured exclusivity on. For example, these near-term opportunities include six data center investments with an aggregate value of ~£200m.
In particular, Digital 9 Infrastructure is in exclusivity to acquire a metro data center based in the UK. Moreover, the firm expects to complete this acquisition by October 31, 2021, subject to due diligence.