KKR to invest US$1b to build data centres in Europe

London

KKR said it will put US$1 billion into a new data centre venture in Europe, as private equity firms chase returns in the growing market for digital infrastructure assets.

The investment firm is teaming up with industry veteran Franek Sodzawiczny to launch Global Technical Realty, which will develop and build data centres for large technology companies in Europe, it said in a press release on Wednesday.

Data centres are drawing increasing interest from private equity firms as more companies outsource the storage of vast information sets to third-party providers.

Macquarie Group, Digital Colony and EQT are among investors that have done deals in the sector.

Mr Sodzawiczny, who previously founded Zenium Data Centers, will become chief executive officer of GTR, according to Wednesday's statement. Zenium received backing from billionaire George Soros' Quantum Strategic Partners and was acquired by CyrusOne in 2018.

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KKR is committing capital from its third global infrastructure fund to GTR, which will be able to deploy more than US$2.5 billion including debt financing towards building new data centers, it said in the statement.

There were more than 100 mergers and acquisitions involving data centres announced last year, the highest tally on record, according to Synergy Research Group. Private-equity dealmaking in the industry increased 50 per cent, Synergy data showed.

Digital Colony and EQT agreed in May last year to take Zayo Group Holdings private in a deal valuing the fibre network and data centre operator at about US$8 billion.

Infrastructure managers, flush with investor cash, are also looking to capitalise on the trend. Real estate investment trust Digital Realty Trust agreed last year to buy Interxion Holding, which provides data centers and colocation services to electronic traders, for roughly US$7 billion. BLOOMBERG