The data center industry is a multibillion-dollar industry. According to Gartner, end-user spending on data center infrastructure for 2020 was $188 billion, a 10.3% decrease from 2019’s spending. With these figures, we can reach a consensus that there’s a massive market available for data center firms. These firms only have to reach them.
One way to increase market reach is by securing funds that will aid expansion at various levels. There have been some firms that have successfully secured significant financing/funding deals in the Q2 of 2021.
Let’s take a look closer look at some of them below and see where they’ll be investing the funds into.
IPI Partners announced one of the biggest funds raising in April 2021 by securing $3.8 billion in funding through IPI Partners II. Impressively, the fund raised was the Company’s second as it has raised $1.45 billion just last year. IPI Partners continues to enjoy excellent investor support. It will be interesting to see where IPI Partners will invest the raised funds in.
In a bid to refinance existing senior bonds and loans, improve its weighted average cost of debt and invest in green projects, Equinix announced it priced $2.6 billion worth of notes in May. Equinix also revealed that the secured $2.6 billion bond includes $1 billion worth of notes which it plans to invest solely in green projects. With the ‘Green’ bond, Equinix continues to show its commitment to sustainability while reducing its environmental impact.
Acquisitions of other data center businesses are a way data center firms expand. eStruxture also raised C$600 million ($477.5 million) in May 2021, part of it being geared towards acquiring all of Aptum’s Canadian data center business. Aside from this, the Canada-based Company also said it would use the remaining funds to implement other capital expansion projects in the country.
Switch is another Company that raised funds, with most going into acquisitions. It raised $500 million through senior notes, with $420 million used to fund the acquisition of Data Foundry. Senior notes were an exciting option for Switch because they are less risky and they attract lower interests.
Acquired Data Foundry
Digital 9 Infrastructure, a UK investment trust focused on digital infrastructure, offered ordinary shares to the public intending to raise £100 million. However, it got oversubscribed, and the Company ended up raising £175 million ($246.7 million). Digital 9 said the funds would be used to acquire more digital infrastructure, and it will be interesting to see which digital infrastructure D9 will add to its arsenal.
Sabey secured $250 Million late in June 2021 from J.P Morgan and Wells Fargo. Sabey would be using most of the funds raised ($234 million) to retire existing debts.
GlobalConnect secured what it calls ‘record debt refinancing’ worth €2.7 billion ($3.2 billion) in June. A consortium of six cornerstone lenders, five bookrunners, and three underwriters committed senior debt facilities to GlobalConnect. Also, the €2.7 billion ($3.2 billion) debt refinancing happens to be one of the biggest secured by a Nordic private Company in 2021.
With a portfolio of 16 data centers spread across the Nordic region, we’ll continue to observe if the Company will break ground on other facilities to add to its already impressive portfolio.
Final Words
For data center companies to penetrate the market effectively, funds must be raised and invested in the right projects/infrastructure. In the 2nd Quarter of 2021, some firms have been more successful in raising funds than others.
A good number of these firms that secured funding said they’ll use the funds for acquisitions and expansions. Hopefully, we’ll see significant moves from them before the end of the next quarter.
