Canadian colo platform company eStruxture Data Centers, fresh from announcing Alberta’s largest data center after a springtime equity investment from Fengate Asset Management, expects to raise more incremental debt to support the Calgary-area deal and similar projects, eStructure’s founder told Infralogic.

eStruxture has remained “in a near constant state of raising incremental debt in support of our growth business,” CEO and President Todd Coleman told Infralogic in an emailed statement. “We recently completed an upsize to our existing credit facility in the past few weeks. With the credit markets remaining favorable, we expect to raise incremental debt in the future in support of this project and others.”

eStruxture declined to name banks involved in the credit upsizing. Last year, the company secured a CAD 170m credit facility with banks including Scotiabank, National Bank, BMO Bank of Montreal and Deutsche Bank.

The CAD 750m (USD 540m) commitment to build the 90 MW CAL-3 project in a county north of Alberta is “Our biggest data center announcement to date and certainly the biggest data center announcement for the Calgary area,” Coleman said in an interview the day of the announcement. “It was really driven off of the demand that we’ve seen since 2019 when we came into the market on the back end of acquiring the Shaw Data Center in Calgary.”

In a statement to Infralogic, Fengate Managing Partner George Theodoropoulos said the CAL-3 project furthers the goals of Fengate’s investment.

“The latest commitment to expand the eStruxture platform in Alberta goes hand-in-hand with the goals of our CAD 1.8bn deal in June – to grow the eStruxture platform nationwide and advance Canada’s technology sector,” he said.

AI demand

The demand for expanded digital infrastructure is driving multiple developments in the infrastructure market, such as the resurrection of yieldcos and developers tapping into the project finance markets. Tech giants Microsoft and Google and other hyperscalers are seeing burgeoning demand for AI services as their cloud businesses grow revenues.

In fact, Microsoft executives said on the company’s earnings call this week that it hasn‘t been able to procure build data center capacity quickly enough to satiate demand.

In addition to the demand eStruxture already is seeing, such as from hyperscale and cloud computing firms, developing projects like CAL-3 comes in “anticipation of the AI demand that’s coming north of the border over the next several years,” Coleman said.

This week’s announcement came after the CAD 1.8bn continuation fund process that Fengate closed on in the spring for Montreal-based eStruxture.

“It comes on the heels of our transaction announced in June,” Coleman said.

“This has been an active project well before the transaction closed in terms of land and power sourcing, but … we weren’t pulling the trigger on anything of this size without that incremental investment,” Coleman said. “So, in that regard, that investment was a linchpin to being able to pull this together.”

eStruxture concentrates on urban developments with energy infrastructure, fiber-optic lines and the workforce needed to support data centers. With the dry powder available to the firm, “This won’t be the last large development project that we announce in the near to medium term,” Coleman said. The firm has 15 locations spread across the Montreal, Toronto, Calgary and Vancouver areas. Its strategy is to “go deeper” in the provinces where it already operates and continue to evaluate whether to enter other provinces, Coleman said.

“Given where our demand is, massive projects like this work in provinces where we can get both land and power and work with provinces that are super business friendly. Obviously that all led us to Alberta,” he said.

Theodoropoulos alluded to the fact that Canada’s cool weather can help mitigate one of the costs of upkeep for data centers.

“Canada has an abundance of something every data center can use – cold weather. Fengate sees Alberta as a premier data center location given its cool climate, abundance of power and skilled workforce.”

In addition to the financial benefits of the Fengate investment, working with Fengate is also helping eStruxture advance sustainability goals. As it develops more data centers, the firm is “actively, constantly looking at the renewables and how we can further green our energy.”

“Those are the active discussions that we’re having. And that obviously dovetails with the Fengate investment,” Coleman said. “They are sustainable energy investors across North America, and particularly in the US and so you know there are positive synergies between us in terms of our power consumption and how they think about some of their other alternative long-term investments.”