March 28, 2017 —
Digital Bridge Holdings, along with Public Sector Pension Investment Board and TIAA Investments, has purchased Vantage Data Centers, a hyper-scale data center operator whose customer base includes cloud service providers and large enterprises.
Vantage has four data centers on the flagship Santa Clara, California, campus, two more under construction, and a second large-scale campus under development.
In July 2016, Digital Bridge first entered into the enterprise-class data center business when it acquired DataBank, a North American provider of enterprise-class data center solutions including collocation, managed services, as well as cloud and network services. DataBank, in turn, acquired the network-neutral data center facilities of 365 Data Centers in January 2017, which included interconnection assets.
The data center space, which consists of hundreds of middle market companies, is going through a wave of consolidation that is similar to what happed to the tower industry from 2005 to 2013, according to Ganzi.
“We have found that given our access to capital, and our ability to build platforms and to do roll ups, we are in a good position to execute that same strategy in the data center space,” Marc Ganzi, co-founder and CEO of Digital Bridge, said in an interview with AGL eDigest earlier this year.
The vertical industries within the data center space — interconnect facilities, enterprise data storage, and wholesale, hyperscale cloud computing — are also converging.
“Obviously, we think interconnect is a great business. The ability to create an environment where carriers can cross-connect creates a very fertile ecosystem,” Ganzi said. “The enterprise data storage business feels very tower-like. These are Fortune 500 companies signing five-, 10- to 20-year leases with us.”
The third business segment — wholesale, hyperscale cloud computing — is very specialized, according to Ganzi. Potential customers include the likes of Microsoft, Google, Amazon, and Dell.
“What we like about this space is the long-term, non-cancelable leases, investment grade tenants, and secure, sticky environments, where they are not going to leave,” Ganzi said. “Again, a lot like towers. That is an interesting space and one that we are spending a lot of time on.”
RBC Capital Markets and DH Capital served as financial advisors, and Simpson, Thacher & Bartlett LLP acted as legal advisor to Vantage in connection with the transaction. Jones Day acted as lead M&A counsel, Kleinbard LLC acted as investment structure counsel, and Ernst and Young LLP served as accounting advisor to Digital Bridge. Davies Ward Phillips & Vineberg LLP acted as legal advisor to PSP Investments, and Arnold & Porter Kaye Scholer LLP acted as legal advisor to TIAA Investments. TD Securities together with CIT Bank, N.A., RBC Capital Markets, and SunTrust Robinson Humphrey provided debt financing commitment for the acquisition.