The Deutsche Bank-led sale for NYSE-listed DigitalBridge’s Brazil-based Scala Data Centers is facing challenges, according to four sources.

The process, which began in the second half of last year, has not resulted in a deal yet, the sources told Infralogic. The data center developer has received interest from multiple potential investors, but sale efforts have slowed, three of the sources said.

Deutsche Bank has been working on the sale since June 2024, two of the sources said. DigitalBridge is still engaged with prospective buyers and is awaiting better market conditions to maximize valuation, while continuing to source new sources of capital for the Brazilian developer, one of the people said.

This comes amid pressures on the broader Brazilian economy due to trade tensions with the US that have affected the deal, one source said. The situation, combined with uncertainties surrounding Brazilian regulation and taxation policy, is slowing the pace of commercial agreements, financing, and mergers and acquisitions.

Companies such as Actis, KKR, Patria Investimentos, Elea, and Ascenty are among those actively pursuing and disclosing new investments in the segment in Brazil.

Some bidders that studied the asset and ultimately walked away include Global Infrastructure Partners (GIP), Singapore’s GIC and Canadian institutional investor the Investment Management Corporation of Ontario (IMCO), one source said. A Brazilian asset management firm also studied a potential bid, according to a second source. While CDPQ and CPP Investments were approached for the sale, they did not pursue a deal, a fifth source said.

While the sellers received bids at what the first source described as “a fair valuation,” those bids did not fully reflect Scala’s growth potential.

The sellers were targeting an enterprise value of above USD 4bn, one of the sources said. That valuation would include contracts that have been sold but not yet billed (Booked But Not Billed).

Scala reported a net loss of BRL 71.1m (USD 11.5m) in 2024, according to a financial report disclosed in April, widening from a BRL 63.8m loss in the previous year. The company showed growth in its operational performance, with EBITDA rising to BRL 254.6m from BRL 122.2m in 2023. EBITDA margin climbed to 36.73% from 23.65%.

The company’s net worth also grew, reaching BRL 4.33bn in 2024, up from BRL 3.42bn in 2023, driven by new capital injections, the report said. The company’s net debt more than doubled, increasing from BRL 1.68bn to BRL 3.85bn over the same period, a move justified by the new issuance of domestic bonds to support the expansion phase. Its free cash flow declined, falling from BRL 1.17bn in 2023 to BRL 965m in 2024.

Growing pains

During the sale process, some investors raised concerns over the relationship between Scala’s CEO Marcos Peigo and his ties to local data center construction company Modular Data Center, according to two of the sources mentioned above. Peigo is a co-founder and shareholder of Modular Data Centers, a company that has worked with Scala to build data centers. Some of the interested bidders questioned the transparency of the relationship between the companies and potential overreliance on a related-party contractor, the sources said.

Launched in 2023, Modular specializes in prefabricated, modular data center solutions, which Scala has used to accelerate its expansion across Latin America. While this partnership allowed Scala to grow quickly, investors have questioned whether future projects would remain dependent on Modular due to any long-term contracts, complicating the company’s operational independence post-acquisition.

Separately from the Scala sale process, Peigo and other owners of Modular have mandated Brazilian bank Bradesco to sell that company and have already seen offers from two strategic investors, the first source said.

Capital now, cost later

Scala recently secured a USD 250m project finance facility for its business in Chile that involves facilities operating with Modular’s equipment.

The Chilean asset financing was facilitated by the use of a standalone entity for Scala’s Chilean operations, according to the fourth source.

Scala has big plans for further data center build-out. The company is developing the USD 500m, 54 MW Scala AI City data center project in the state of Rio Grande do Sul. Governor Eduardo Leite said in September last year that there is potential to scale up the project’s initial investment to reach as much as 4.75 GW of data center capacity in the area.

Scala AI City is not yet built, but it received approvals from Brazil’s Ministry of Mines and Energy for the development of its first phase in May.

In September 2024, Scala Data Centers completed a USD 500m structured financing — USD 250m from Coatue Tactical Solutions and USD 250m from the IMCO – to accelerate expansion across Latin America to support the compounding growth of cloud and AI.

Brazilian bank Bradesco BBI coordinated a BRL 2bn domestic green bond issue for Scala in December 2024 to provide funds for its expansion plans. In March 2025, Scala Data Centers secured a BRL 180m financing with Brazil’s development bank BNDES to acquire equipment for data centers.

Also in April, Scala approved a BRL 50m financing with Branco Safra and, in May, the company approved a USD 25m credit line to be contracted with Caterpillar Financial Services Corporation.

The data center developer is also working with Deutsche Bank to raise up to USD 350m in fresh financing for Scala’s Brazilian operations, according to the third source.

In April this year, Scala sold a data center building located in Rio de Janeiro to a GIC-Alianza joint venture in a sale and leaseback operation, according to antitrust filings.

In January 2024, Scala approved contracting bank guarantees for its subsidiaries in Chile and Mexico as part of an export financing obtained by Modular Data Centers with Banco do Brasil.

Scala Data Centers, Digital Bridge, Deutsche Bank, CPP Investments, CDPQ and Bradesco declined to comment. GIP, GIC, IMCO and Modular did not respond to requests for comment.

[Editor’s note: The eighth paragraph has been updated post-publication to note the sellers were targeting an EV of above USD 4bn for the sale of Scala Data Centers.]