KKR’s $1bn investment in Europe’s brand-new data centre player means big business for PE
Former Zenium, JLL, Cushman & Wakefield and Colliers International executives to head new brand which KKR has made a further equity commitment expected to support more than $2.5 billion of asset development and investment.
Global investment firm KKR (NYSE: KKR) has announced a $1 billion investment in a new data centre business planning to build facilities across Europe.
Global Technical Realty (GTR) has been set up as a build-to-suit and roll-up acquisition data centre platform “seeking suitable M&A opportunities, primarily in key European markets”.
The company was founded by industry veteran Franek Sodzawiczny who serves as CEO of the business.
KKR said the capital comes from its third global infrastructure fund, which may be supplemented with additional commitments over time, to develop and build data centres for large technology companies through GTR across Europe over the coming years.
Alongside debt financing, KKR’s equity commitment is expected to support more than $2.5 billion of asset development and investment, including opportunities from “a highly active commercial pipeline” as the demand for third-party data centre provision continues to grow.
The move comes as more private equity funds continue to commit cash to the expansion of data centre businesses as demand for digital services continues to break records.
Elsewhere, GTR has so far partnered with Mercury Engineering to design and develop a data centre product specifically catered to the needs of hyperscale cloud service providers.
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Waldemar Szlezak, Managing Director of KKR, said: “The data centre market in Europe presents a unique opportunity to invest behind the secular trend of increased cloud services adoption and demand for data.”
GTR CEO Sodzawiczny, former founder and CEO of Zenium Data Centers later acquired by CyrusOne and co-founder and CDO of Sentrum, said: “We are thrilled to have found an investor like KKR that shares our vision for the future of the data centre market.”
Speaking to Data Economy, Sodzawiczny added: “We anticipate a period of significant increase of capacity in the next 5-10 years. This will be supplemented by targeted acquisitions and whilst we will not comment on specific plans for acquisitions at this time, we are excited by opportunities to acquire smaller individual assets in secondary European markets.”
In terms of specific geography targets, the big four markets of Europe – London, Paris, Frankfurt and Amsterdam – are some of the destinations Sodzawiczny has got his eyes on.
“We will not comment on customers, but in terms of countries, we are comfortable with most European geographies,” he said.
“We will, however, focus primarily on the biggest data centre markets such as Frankfurt, London, Amsterdam and Paris. We are also interested in smaller secondary European markets such as Milan, Madrid, Warsaw and Stockholm.”
As the world faces the Covid-19 pandemic, when asked about if the pandemic has had any impact on the discussions around GTR, Sodzawiczny explained that the virus has not held back any plans throughout the pre-launch period.
He said: “While we are all taking Covid-19 very seriously, this is an investment plan with a long term hold period managed through KKR’s infrastructure fund. KKR had been in discussions with GTR regarding this investment for some time before COVID-19, and we all believe the fundamentals of the industry are resilient.
“The process of establishing and growing a data centre business can take several years before signing contracts with customers begins, and we have all approached this with a long-term perspective.
“Interestingly, COVID-19 has actually accelerated market demand, with migration to the cloud occurring even faster as more businesses work remotely and use more data capacity. The end result of this change in working environments has, therefore, further strengthened KKR’s investment case in GTR.”
Sodzawiczny and his management team have built over 400MW of data centres across the globe. Other members of the staff include Martin Carroll, formerly Lead Director, EMEA Data Centre Advisory at JLL; Mark Trevor, formerly Partner and Head of EMEA Data Centre Transaction and Advisory at Cushman & Wakefield and Tom Sodzawiczny, formerly Associate Director of Capital Markets at Colliers International.
KKR was advised by Simpson Thacher & Bartlett. Global Technical Realty was advised by Charles Russell Speechlys.
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