KKR & Co. said it will put $1 billion into a new data center 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 centers for large technology companies in Europe, it said in a press release Wednesday, confirming an earlier Bloomberg News report.
Data centers are drawing increasing interest from private equity firms as more companies outsource the storage of vast information sets to third-party providers. Macquarie Group Ltd., Digital Colony and EQT AB are among investors that have done deals in the sector.
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’s Quantum Strategic Partners Ltd. and was acquired by CyrusOne Inc. in 2018.
KKR is committing capital from its third global infrastructure fund to GTR, which will be able to deploy more than $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 centers announced last year, the highest tally on record, according to Synergy Research Group. Private-equity dealmaking in the industry increased 50%, Synergy data show. Digital Colony and EQT agreed in May last year to take Zayo Group Holdings Inc. private in a deal valuing the fiber network and data center operator at about $8 billion.
Infrastructure managers, flush with investor cash, are also looking to capitalize on the trend. Real estate investment trust Digital Realty Trust Inc. agreed last year to buy Interxion Holding NV, which provides data centers and colocation services to electronic traders, for roughly $7 billion.