EQT Selling Minority Stake in Data Centre Firm EdgeConneX to Sixth Street

Swedish private equity firm EQT has agreed to sell a minority stake in global data centre platform EdgeConneX to US-based fund manager Sixth Street Partners, the parties announced Tuesday.

After first investing in EdgeConneX in 2020, EQT will remain the largest shareholder following the disposal by its Infrastructure IV and Infrastructure V funds, the firm said in a release. No details were disclosed about the deal’s financial terms or the stake’s exact size.

EdgeConneX has 80 data centres in operation or development in more than 50 markets across the Americas, Europe and Asia Pacific. EQT described Sixth Street as a “strategic partner” that would help accelerate EdgeConneX’s ability to deliver capacity to customers.

“With this transaction, EQT believes EdgeConneX is well-equipped to deliver scalable, high-performance data centre solutions that will power the next generation of AI,” said Jan Vesely, a partner on the advisory team at EQT’s infrastructure arm.

Backing Speedy Growth

EdgeConneX attracted Sixth Street with its scale, high-quality performance and capability to meet increasing global demand for data centre capacity and services, said Julian Salisbury, co-chief investment officer at the San Francisco-based firm.

“We’re pleased to bring our team’s deep experience in digital infrastructure and real estate asset investing to this partnership and join EQT in supporting EdgeConneX’s strategic growth,” Salisbury said.

The deal remains subject to customary conditions and approvals and is expected to close in the fourth quarter of this year, EQT said.

In August 2020, Stockholm-based EQT announced that its Infrastructure IV fund was acquiring EdgeConneX from an investor group led by Providence Equity Partners. The fund manager said at the time that it was committed to actively supporting the platform’s accelerated growth via new market entries and material expansions of existing locations.

The Infrastructure V fund made its own investment in EdgeConneX in 2021 to help capture growth and development opportunities such as winning additional customer contracts, expanding the platform’s footprint in key markets and pursuing accretive M&A.

In Asia Pacific, EdgeConneX has an India joint venture with Adani Group, led by billionaire Gautam Adani. Flagship holding firm Adani Enterprises unveiled a plan earlier this year to invest INR 500 billion ($6 billion) in developing and operating hyperscale data centres in Maharashtra state over 10 years.

Last September, EdgeConneX announced its entry into Malaysia with a plan to develop 300 megawatts of capacity across three locations. The projects gave US-based EdgeConneX a development presence in a fifth Asian market after previous initiatives in China, Indonesia, the Philippines and India.

APAC Supply Surge

An aggressive expansion by regional platforms saw the APAC data centre market add 1.3 gigawatts of new supply in the first half of 2024 to reach operational capacity of 11.6GW, according to an update by Cushman & Wakefield.

Malaysia saw the greatest increase in operational capacity with an 80 percent gain compared with the previous six-month period, followed by India with 28 percent, the consultancy said.

In Malaysia, Johor’s 1.9GW of existing and committed capacity put the southern state on the brink of joining the region’s four 2GW-plus markets, namely Beijing (2.9GW), Tokyo (2.7GW), Shanghai (2GW) and Sydney (2GW). Cushman rates Johor as the region’s second most “mature” market, trailing only Sydney, due to a low vacancy rate of 2 percent and the highest build capacity among markets.

Earlier this month, US investment giant Blackstone agreed to buy AirTrunk in a deal valuing the APAC data centre platform at A$24 billion ($16.1 billion), or more than $20 million per megawatt of committed capacity, setting a benchmark to be closely watched by fast-growing regional players like Warburg Pincus-backed Princeton Digital Group and Stonepeak-backed Digital Edge.

Sixth Street, investment bank Goldman Sachs and other partners had sold an 88 percent stake in Sydney-based AirTrunk to a Macquarie-led consortium in 2020.