Vantage Data Centers, a hyperscale data center provider, today announced the acquisition of the hyperscale data center business from Hypertec in Montreal, Canada. Currently, Vantage has 13 operating hyperscale campuses and 4 which are under development. This transaction only relates to Hypertec’s data center and colocation operations, which will be re-branded under Vantage Data Centers.
The addition of Hypertec, expands Vantage’s total footprint in the province of Quebec to 81 MW of IT capacity, across three campuses. Vantage is positioning itself to benefit from increasing hyperscale customer demand in the Montreal market. Specifically, Hypertec’s 49 MW campus includes 25 MW across two existing facilities and 24 MW of expansion capacity.
Additionally, the Hypertec campus is located less than two miles from Vantage’s existing 11 MW campus in Montreal. Moreover, the Hypertec campus sits on 10 acres and will consist of 320k square feet, once fully developed.
Montreal Data Center Market
Vantage considers Montreal an attractive market because of the hyperscale growth it is experiencing. Hyperscale customers including Amazon Web Services, Microsoft Azure, and Google Cloud are seeking to locate in Montreal. This is a direct result of the city’s access to scalable renewable energy, attractive power costs, tax incentives and robust fiber connectivity. Specifically, Hypertec has benefitted from recent demand from Amazon Web Services.
Since entering the Canadian market, Vantage has invested heavily in the region. Specifically, Vantage acquired 4Degrees Colocation from Videotron, a subsidiary of Quebecor Media, for $193m in 2019. Based on 4Degrees Colocation’s EBITDA of ~$9.7m, at the time, the transaction equated to a multiple of 20x EBITDA. In terms of operations, 4Degrees Colocation had two data centers, with 16 MW of power capacity.
Funding and Advisors for the Transaction
The Hypertec transaction was funded by investment vehicles managed by Digital Colony, which is the digital infrastructure private equity fund of Colony Capital (NYSE: CLNY). Additionally, acquisition debt financing was used to fund a portion of the Hypertec acquisition.
RBC Capital Markets acted as the financial advisor to Hypertec, and BCF acted as legal counsel.
Ownership, Capital Raising and M&A of Vantage Data Centers
In October 2020, Colony Capital alongside third-party capital, invested $1.36bn for a ~90% equity interest in Vantage Data Centers’ portfolio of 12 stabilized hyperscale data centers in North America. Thus, Vantage’s overall valuation was $1.5bn. Further, Colony Capital’s balance sheet investment is ~$200m, representing a ~13% ownership interest.
Additionally, in November 2020, Vantage raised $1.25bn in incremental equity capital from its existing investors. Specifically, the purpose of this capital raise was to fuel ongoing data center expansion and development across North America and Europe. Indeed, the Hypertec transaction exemplifies a specific use of the proceeds from this capital raise.