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

[LONDON] KKR & Co plans to put US$1 billion into a new data centre venture in Europe, according to people familiar with the matter, 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 (GTR), which will develop and build data centres for large technology companies in Europe, the people said. The venture could be announced as soon as Wednesday, they said, asking not to be identified as the matter is private.

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 the people. Zenium received backing from billionaire George Soros's Quantum Strategic Partners and was acquired by CyrusOne in 2018.

KKR is committing capital from its third global infrastructure fund to GTR, which will be able to deploy more than US$2.50 billion to building new data centres including debt financing, the people said. A representative for KKR declined to comment.

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

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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 centres and co-location services to electronic traders, for roughly US$7.15 billion.

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