EQT, a private equity firm, through its EQT Infrastructure V today announced that it has signed an agreement to co-invest alongside EQT Infrastructure IV in EdgeConneX, a global data center operator with a dual focus on both edge and hyperscale facilities. Upon completion of the transaction, both EQT Infrastructure IV and V will have an equal ownership stake in the company.
As of June 30, 2021, EQT Infrastructure V had €15.1bn of equity commitments. By late-July 2021, the firm noted that EQT Infrastructure V was 50% to 55% invested. Following EQT Infrastructure V’s acquisition of a stake in EdgeConneX, the fund will be 55% to 60% invested. Therefore, EdgeConneX may represent ~5% of EQT Infrastructure V’s equity commitments, implying an equity check for the fifth fund’s stake in EdgeConneX of ~€755m.
Finally, closing of the transaction is expected in Q3 2021.
EQT Infrastructure Enters EdgeConneX
In November 2020, EQT Infrastructure IV closed the acquisition of EdgeConneX from Providence Equity Partners and Brown Brothers Harriman. In terms of valuation, EdgeConneX was purchased for $2.7bn, equating to a multiple of 24.0x EBITDA.
Additionally, Liberty Global rolled-over its equity ownership, as part of EQT Infrastructure’s acquisition of EdgeConneX. Specifically, as of Q2 2021, Liberty Global owns a 5.2% equity interest in EdgeConneX.
During the six-months ended June 30, 2021, Liberty Global increased the valuation mark on its EdgeConneX equity investment by 25%. Implicitly, Dgtl Infra infers that EQT Infrastructure V will also have to pay a similar premium for its equity stake purchase from EQT Infrastructure IV.
Growth Opportunities – EdgeConneX and EQT Infrastructure
EdgeConneX’s portfolio consists of 50 data centers in 40+ markets across North America, Europe, and South America.
Following EdgeConneX’s acquisition by EQT Infrastructure IV, the pair have identified additional growth and development opportunities. Specifically, this includes both expanding the business’ footprint through the development of new data centers and pursuing M&A. Indeed, EQT Infrastructure V’s equity investment will help fund these growth opportunities.
India Joint Venture
In February 2021, EdgeConneX and Adani Enterprises, the infrastructure investment arm of the Adani Group established a 50%/50% joint venture, known as AdaniConneX. Notably, AdaniConneX intends to develop 1 gigawatt (GW) of data center capacity over the next decade in India.
Presently, the joint venture is constructing a network of hyperscale data centers in the Chennai, Navi Mumbai, Noida, Vizag, and Hyderabad markets of India.
Expansions and Potential Pipeline
Below is a combination of EdgeConneX’s announced expansion plans and disclosures on potential further development opportunities within its portfolio.
- Various: 20 megawatts of new capacity across its existing footprint in the Seattle, Portland, Phoenix, Miami, Detroit, and Chicago markets
EMEA (Europe, the Middle East and Africa)
- Barcelona, Spain: 8.4 megawatts of power capacity across 81.8k sqft (7.6k sqm), which is opening in Q4 2021
- Amsterdam, Netherlands: 40 megawatts of power capacity across 194k sqft (18.0k sqm) for a new data center build on a land-banked parcel
- Dublin, Ireland: 170+ megawatts of operational and power banked capacity, supporting two existing and up to five new data centers in the Grange Castle Business Park
- Israel: upon completion of EdgeConneX’s acquisition of Global Data Center (GDC) the company will have the “ability to invest in new capacity in Israel”
- Santiago, Chile: 7 megawatts of power capacity across 28.0k sqft (2.6k sqm) of total planned space at SCL01. Additionally, the company is preparing to build SCL02 on its Santiago campus
- Buenos Aires, Argentina: 3.5 megawatts of existing power capacity, with the site capable of scaling to 10.5 megawatts