Private equity fuels Nordic growth.

Private equity companies are betting on the Nordic data center sector as demand for services in the region accelerates.

Article published by Computerweekly 27 Sept 2021

 

International private equity groups have scaled-up acquisition activities in the fast-expanding Nordic datacentre sector. IPI Partners’ takeover of DigiPlex and Azrieli Group’s purchase of Green Mountain, both in July, signal a new wave of mergers and acquisitions. Takeover interest in the Nordic data center industry has recently been driven by important legislative changes, particularly in Sweden and Norway.

These offer attractive tax advantages to investors, and foreign and local investors are also being tempted by access to a substantial reservoir of renewable energy, offered at prices which are among the lowest in Europe.

The acquisition of the Norway-based DigiPlex by IPI Partners underscores the growing attractiveness of Nordic data center assets for private equity groups augmenting their sustainable energy and green technology portfolios. Neither party disclosed the financial terms of the takeover deal.

Chicago-headquartered IPI has made over €4.5bn in total equity capital commitments since 2016 to grow its hyperscale and enterprise-focused privately held data center portfolios. It is now one of the world’s largest privately held data center portfolios, largely focused on the hyperscale and enterprise markets.

“DigiPlex is a market leader in the high-growth Nordic data center sector,” said Matt A’Hearn, partner at IPI. IPI’s portfolio also includes linked technology and connectivity-related assets. “Our existing scaled presence and deep development expertise will help us to significantly expand our hyperscale-focused data center portfolio in Europe, a key region of focus for IPI.”

Facility sites
DigiPlex is one of the Nordic region’s biggest operators of scalable and sustainable data centers. It operates eight across the Nordic states, with facility sites located in Oslo, Stockholm and Copenhagen.

The DigiPlex facilities impacted by the takeover deal includes of 21,000 square metres of built infrastructure and over 400,000 square metres of land that is currently available to expand operating capacity.

A central feature of the takeover transaction is that IPI is acquiring 100% ownership in not just the publicly traded DigiPlex, but also complete equity ownership in all group-owned subsidiaries.

Expanding services
In September 2021, DigiPlex secured the global information security Payment Card Industry Data Security Standard (PCI/DSS) for all of its eight Nordic data centers, a development that advances its ability to meet the stringent anti-fraud PCI/DSS classification set by credit card brands, including the big five credit card issuers Visa, MasterCard, American Express, Discover, and the Japan Credit Bureau.

“The PCI/DSS upgrade, combined with the DigiPlex Nordic Connect service, can provide businesses offering credit card payment facilities with a pan-Nordic datacentre solution” said Fredrik Jansson, DigiPlex’s chief commercial officer.

“We have had PCI/DSS certification at a number of our sites for several years,” said Jansson. “Extending this level of assurance to all our Nordic sites increases flexibility and alternatives for our customers.”

Growth rate
Based on its growth trajectory since 2018, the Nordic datacentre market has the potential to grow from a projected 170-MW in 2021 to over 900-MW in 2026. In the case of Norway’s green energy capacity, 100% of the domestic datacentre industry’s future sustainable power needs can be met by long-term contracts from local renewable energy producers.

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