This is an overview of Mergermarket proprietary intelligence in the data centres segment in Europe over the last four months, featuring existing opportunities in the market. Snapshot is the new name for a Preview. 

Appetite for data-centre assets in Europe is expected to surge in 2024 against a backdrop of growing demand to store and host digital information.

The advent of artificial intelligence (AI) and cloud computing, the ever-expanding number of people connecting online and the proliferation of cryptocurrency mining has spurred unprecedented demand for data centre services. Investors are keen to gain exposure to the asset class as a result.

In 2024, data-centre M&A and deal flow will remain strong amid interest from strategics as well as from investors looking to deploy capital, according to Anthony Yaneza, Director in Houlihan Lokey’s Digital Infrastructure Team.

“Over the last 12 months, we have seen a significant increase in demand for data centres from hyperscale AI and cloud requirements across the globe, leading to a significant shift in the size of data centre developments and deployments,” said Yaneza.  “This will inevitably lead data centre operators to look to raise new capital across equity and debt as they continue to grow,” he added.

Despite an overall decline in EMEA M&A deals, some EUR 2.65bn worth of data-centre-related deals were completed in 2023, staying broadly flat compared to the year before (EUR 2.64bn), according to Mergermarket data.

One significant deal in 2023 was Data4, which was sold by AXA IM Alts to Brookfield [NYSE:BAM] and was also among the largest transactions in the space.

Among those seeking investment includes Yondr Group, which is said to be exploring a minority stake sale in some of its European assets that could raise over EUR 1bn in equity investment. Dutch infrastructure investor Photon Capital is also mulling an equity raise of between EUR 1bn and EUR 1.5bn linked to its European data centre portfolio company Pentra Infra.

“We have seen a significant increase in the number of data centre platforms—from large-scale hyperscale facilities through to regional edge data centres—seeking to expand their footprints,” said Yaneza.

“We also expect to see telcos and service providers continue to explore data centre carve-out, particularly where colocation is not a core focus,” he added.

Among those operators seeking to sell their data centre assets includes GlobalConnect’s the EQT Infrastructure-owned Swedish digital infrastructure group, which is weighing a sale of its data centre business which could be valued in the region of 20x EBITDA. Infrastructure fund Asterion Industrial Partners and Telefonica [BME: TEF] are in the stages of preparing a sale of Madrid-headquartered data centre operator Nabiax, while French telecom group Iliad [EPA:ILD] is working with investors for the sale of its newly formed data centre subsidiary Opcore.

Elsewhere, unified communications and IT service providers, which too own physical data centre assets, are also drawing investors. Those expected to come to market include the unified communications IT service specialist ARO which is expected to come to market later this year. The owner of Welsh telecoms services provider Indigo Telecom is also exploring potential sale options, with the company having a  Likely to Exit (LTE) score of 58 out of 100, according to Mergermarket’s predictive algorithm.

*Mergermarket’s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.

Proprietary intelligence

ARO (26/01/24)

MML Capital Partners is exploring a sale of unified communications and IT services provider ARO for later this year, according to three sources familiar with the matter. The sponsor is working with advisors to explore a potential exit in the UK-based company specializing in business communications, IT, and energy service to UK customers, two sources said.

GlobalConnect (24/01/24)

GlobalConnect is preparing to kick off a sale process for its data centre operations, according to three sources familiar with the matter.  A formal sale process for the assets is slated to officially launch next month, two of the sources said, with one adding that a teaser has already been released to prospective buyers.

DigitalWell (21/11/23)

The owners of DigitalWell are exploring a sale of the Dublin-based IT and unified communications provider, two sources familiar with the situation said. The company, formerly known as Welltel, has appointed Clearwater International as its financial advisor to guide it through the process, the sources said. The process is expected to focus on the sale of a majority stake, one of them added.

Yondr (17/11/23)

Yondr Group is weighing a sale of a stake in its European data centres operations, in a deal that could raise over EUR 1bn of equity investment, according to sources familiar with the matter. The global developer and owner of hyperscale data centres is working with advisers at Citi to seek out an equity investor for a joint venture vehicle that will contain some of the group’s existing data centre facilities in Europe, according to four sources.

Indigo Telecom (13/11/23)

Growth Capital Partners (GCP) is exploring options for Welsh telecom services provider Indigo Telecom ahead of a potential sale process next year, two sources familiar with the situation and a sector banker said. The UK-based sponsor has hired Houlihan Lokey to guide the company through the process after interviewing several financial advisor candidates earlier this year, the two sources said.

Eclit (08/11/23)

Turkish PE Turkven is preparing its cloud-managed services firm Eclit as its next potential exit candidate after its successful exit of Mikrogrup, two sources familiar with the situation said. The move follows its ongoing roll-up strategy, the sources said.

Penta Infra (11/10/23)

Digital infrastructure investor Photon Capital is exploring an equity raise of between EUR 1bn and EUR 1.5bn linked to its European data centre portfolio company Penta Infra, Penta Infra CEO Alex Bakker said. Torch Partners is advising Photon on the equity raise, Bakker said. A sale teaser is expected to be distributed by the end of the month or early November, added three sources familiar. Bakker did not elaborate on the timing of the process.

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