Growing demand for data fuels tech buying bonanza

An "insatiable appetite for data-center capacity" is reported as being one of the major motivating factors behind a transformation of the European data sector, fueled by the growth of the artificial intelligence, or AI, industry.

According to the Financial Times, several major private capital companies are looking to make the most of existing assets through a flurry of data center sales, in many cases because some of the platforms are growing too quickly for the existing owners, and need entities with greater resources, with the prospect of long-term contractual commitments hopefully attracting new backers.

United States-based asset management company Oaktree Capital Management is reportedly offloading part of its European and Middle Eastern data center business, Pure DC, which is valued at up to 5 billion euros ($5.8 billion), while DWS, the asset manager associated with Deutsche Bank, is hoping to raise around 2 billion euros from the sale of its data business NorthC, which has facilities in Germany, Switzerland and the Netherlands.

"What's driving it? The usual — an insatiable appetite for data center capacity, the need to keep on building new data centers, and the inability of current data center operators to fund those investments internally," said John Dinsdale, chief analyst at Synergy Research Group. "We do not forecast this (mergers and acquisitions) activity, but it is certainly possible that deal value in 2025 could match or come close to the record level seen in 2024."

Burkhard Koep, head of media and telecoms for Europe, the Middle East, and Africa at JP Morgan, specifically identified companies' desire "to fund their multibillion cloud and AI infrastructure pipelines" as a factor behind the reported surge in market activity, a trend also highlighted by Michael Trabbia, CEO of telecoms company Orange Wholesale, who spoke at the Mobile World Congress in Barcelona, Spain earlier this year, saying his company was, however, looking to draw in partners, rather than sell.

During a roundtable discussion, he said Orange planned to scale up its facilities and make them available for third-party usage because of the obvious demand.

"When you look at the power of the data centers that we have, we can certainly multiply this existing power by three, four, five — we will see exactly (how much in the future) — and that's additional capacity that we are considering bringing to the market," he explained. "We believe that we have been building some assets with a lot of potential (for) expansion, so we have this opportunity to host much more capacity."

Last month, the Mobile Europe website reported that investment organization EQT had called in Goldman Sachs to advise on the proposed sale of its data center and broadband company, GlobalConnect, which, in addition to supplying hundreds of thousands of domestic broadband customers across Scandinavia and Northern Europe, also operates 23 data centers.

Website AInvest described the proposed sale by saying "As the Nordic digital infrastructure sector continues to mature, transactions like GlobalConnect's sale will likely set new standards for valuing connectivity assets in an increasingly data-driven world."