Global investment firm EQT places bet on edge data centers with EdgeConneX buy

Global investment firm EQT places bet on edge data centers with EdgeConneX buy

Global investment firm EQT today announced that the EQT Infrastructure IV fund has agreed to acquire EdgeConnex from an investor group led by Providence Equity Partners. Terms of the deal were not announced.

EdgeConnex, founded in 2009, has been offering edge data center services long before “edge” was really a trend in the industry. The company raised $122M in funding according to Crunchbase.

EQT currently has more than EUR 62 billion in raised capital and EUR 40 billion in assets under management, with portfolio companies in Europe, Asia-Pacific and North America. The funding for the EdgeConnex acquisition comes from the EUR 9 billion Infra IV fund, whose stated goal is to invest between EUR 100 million and EUR 600 million in portfolio companies.

EQT said it would help the actively assist the EdgeConnex in its pursuit of new opportunities to grow in existing and new markets globally. The company said that they believe EdgeConnex is uniquely positioned in the market, citing data generation trends driven by innovations such as artificial intelligence, 5G networks, autonomous vehicles, virtual reality, cloud gaming and IoT.

Jan Vesely, Partner at EQT Partners, said “EQT has followed EdgeConnex’s journey from its early years to its growth into a top data center industry player…This partnership represents an exciting opportunity for EQT in a sector and geographies where we have significant experience. EQT looks forward to working with the team in continuing to grow the business and identify new expansion opportunities.”

“EQT brings significant financial resources and digital infrastructure industry experience which EdgeConnex will use to accelerate growth and invest in new data centers around the world,” said Randy Brouckman, CEO of EdgeConnex. Post-acquisition, Brouckman will continue to serve as CEO of the company.

Analyst Perspective

EdgeConneX has its eye on a number of markets, driven by customer feedback and internal research, and has yet to expand into APAC. The longer term view of an infrastructure investor like EQT should give EdgeConneX the runway it needs to add to its footprint and it is likely that locations outside the US will get a great deal of emphasis given the current global trajectory of hyperscale cloud. In a pandemic environment, with supply chains disrupted and the horizon unclear, infrastructure investors enable long-term decision-making like stocking up on critical infrastructure equipment and real estate. This will enable EdgeConneX to be both strategic and opportunistic.

Phil Shih, Managing Director, Structure Research

Trend: Edge data center investments in 2020

The sale of EdgeConnex comes as a number of companies in the edge data center market have announced funding in 2020. Among this year’s announcements:

EdgeMicro secured $5 million to grow customer portfolio and invest in expanding its micro data centers from DH Capital.

DartPoints received funding from D.C.-based private equity fund Astra Capital Management.

Proximity Data Centres Ltd., a regional UK co-location edge services firm, said Intermediate Capital Group, an asset management firm in London, pledged an “opening commitment” of £25 million ($31.25 million) for the company’s expansion.

Vapor IO, a provider of edge colocation, networking and interconnection services, closed a Series C round of funding for $90m from Berkshire Partners and Crown Castle, both of whom are existing investors.

The EdgeConnex deal is expected to close in the fourth quarter of 2020.

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