Partners Group Buys GIC-Backed US Data Centre Operator in $1.2B Deal

Swiss investment giant Partners Group plans to invest up to $1.2 billion to acquire and expand US data centre operator Edgecore Digital Infrastructure, the company announced Friday, taking over a hyperscale specialist co-founded by Singapore sovereign wealth fund GIC more than four years ago.

The deal will give Partners Group ownership of Edgecore’s 476-megawatt portfolio including a hyperscale campus in Phoenix, Arizona and a trio of development projects across Virginia, Nevada and Silicon Valley, with the fund manager planning to expand the platform with more projects across North America.

“Businesses are increasingly shifting IT infrastructure to scaled outsourced cloud service provider data centers, which have more efficient power and cooling capabilities,” said Fentress Boyse, a member of management with the private infrastructure division of Partners Group’s Americas unit. He added that with Edgecore “at an inflexion point in its growth journey,” his team plans to build a leading, sustainable digital infrastructure platform for the largest hyperscale users.

The buyout marks GIC’s exit from the US digital infrastructure platform it launched alongside a pair of US partners in 2018, with the Singapore fund currently pursuing a $6.9 billion hyperscale expansion in partnership with Equinix, in markets across Asia Pacific, Europe and North America.

Trading Partners

With new backing in place, Edgecore’s management indicates that the company is set for expansion as it lines up locations optimised for development of data centres to support top hyperscale customers.

“We have identified a pipeline of opportunities across the US and believe Partners Group’s extensive experience working with infrastructure platforms, coupled with its financial resources, will enable us to execute on current and future opportunities,” Edgecore chief executive officer Tom Ray said.

In addition to working with Edgecore’s management team to acquire more assets and build fresh facilities, Partners Group plans to support expansion of existing locations and enhancement of sustainability at the platform’s current campuses.

GIC had set up Edgecore in partnership with Denver-based private equity firm Mount Elbert Capital Partners and Canadian pension fund manager OPTrust with a combined $800 million in equity and plans for $2 billion in development and investments.

The Colorado-based operator has expanded its footprint to four locations to date, including five facilities in its Phoenix Data Center Campus in Mesa, Arizona that span 1.1 million square feet (102,193 square metres) with up to 170 megawatt in load capacity.

Its biggest project is the Reno Data Center Campus in Reno, Nevada, which has a potential IT capacity of 180 megawatts across five purpose-built data centres, measuring 1.3 million square feet in combined floor space. Situated 250 miles (402 kilometres) east of Silicon Valley, the company plans to commence operation of the first phase of the project in the fourth quarter of 2023.

Edgecore is also developing a 72-megawatt project in Santa Clara, California which will include a pair of facilities spanning a combined 540,000 square feet, with that campus scheduled to open near the end of next year.

By 2026, the platform is expecting to launch its first Virginia location in Ashburn, where it is developing a 348,000 square foot building to house up to 54 megawatts of IT capacity.

Mingtiandi reached out to company representatives for further details of the buyout deal and GIC’s recent position in Edgecore, but it did not get a response by the time of publication.

Partners Group was advised in the transaction by Latham and Watkins, KPMG, Clifford Chance, and Ropes & Gray, while EdgeCore worked with Greenberg Traurig, RBC Capital Markets, and Ernst and Young.

Digital Partners

Partners Group, which manages $185 billion in assets globally, including $21 billion in its private infrastructure division, sees the rise of cloud computing, machine learning, artificial intelligence and 5G technologies supporting its latest data centre bet, noting a projected 24 percent compound annual growth rate of mobile data traffic in North America through 2027.

“Through our thematic investing approach, we found rising demand for data centers in the US as service providers deploy more capacity to support businesses migrating to the cloud,” said Ed Diffendal, managing director and co-head of the group’s private infrastructure division in the Americas. “We look forward to building out the platform.”

The latest acquisition comes less than one year after Partners Group announced its acquisition of Iceland data centre operator atNorth – which marked its fourth digital infrastructure investment of 2021.

GIC Keeps Spending

Following its exit from the Edgecore venture, GIC’s data centre exposure is concentrated in its partnership with US operator Equinix.

The two companies took on their latest venture in the sector with the January launch of a $525 million initiative to develop and operate two hyperscale facilities in Korea.

Last year GIC committed another $3.9 billion to help expand Equinix’s xScale data centre programme globally, which came on top of two billion-dollar data centre partnerships they formed in 2020 and 2019, focusing on the Japanese and European markets, respectively.

A report released by MSCI Real Assets earlier this month ranked the Singapore sovereign fund as the top investor in Asia Pacific real estate so far this year, with at least $4 billion committed across all asset classes.