Private equity leads spike in datacentre M&A transactions - research
Data from Synergy Research Group has found that datacentre M&A deals have racked up $24bn in 2022 so far
Around 87 datacentre-oriented M&A deals closed in the first six months of the year with an aggregate value of $24bn (€23.5bn), according to data from Synergy Research Group.
The research firm said there is an additional $18bn (€17.6bn) of pending deals in the pipeline that have been agreed but have not yet officially closed, most of which are expected to close before year end.
Synergy went on to say that after adding in the regular flow of transactions that happen with little advance public notice, 2022 is shaping up to match the record-breaking M&A activity levels that were seen last year.
The researcher logged 209 deals that closed in 2021 with an aggregate value of over $48bn, 41 per cent up from the 2020 total of $34bn, which itself was a record year at the time, according to Synergy.
Private equity dominates
It claims a notable trend in the industry has been the recent influx of private funds. In the 2015-2018 period private equity buyers accounted for 42 per cent of deal value.
In 2019 to 2021, as the overall level of M&A activity ballooned, private equity share of the total deal value increased to 65 per cent, while in the first half of 2022 private equity share has jumped to more than 90 per cent.
"There is an ever-increasing demand for datacentre capacity, driven by rapidly growing cloud markets, aggressive expansion of hyperscale operator networks and continued growth of data-rich digital services," said Synergy Research Group chief analyst, John Dinsdale.
"The trouble is that building and operating large fleets of datacentres is highly capital intensive.
"Even the biggest datacentre operators have had to seek external funding to allow them to meet growth targets while protecting their balance sheets.
"As the level of resulting M&A activity has shot through the roof, virtually all of the incremental investment has come from private equity."
2022 highlights
Synergy highlighted the $15bn acquisition of CyrusOne by investment firms KKR and Global Investment Partners, and the pending acquisition of Switch by DigitalBridge for $11bn as landmark deals to happen this year.
Last year's highlights include the acquisitions of CoreSite and QTS, each for around $10bn, with the researcher adding that these deals represent the four highest value acquisitions the industry has ever seen.
All four acquired companies feature in the worldwide top 15 ranking of colocation operators, while they are ranked three through six in the US market, behind only Equinix and Digital Realty.