Real estate fund invests in edge data centers with Proximity deal

Categories Edge Computing News  |  Funding  |  Real Estate
Real estate fund invests in edge data centers with Proximity deal

A London alternative asset management firm in London has pledged an “opening commitment” of £25 million ($31.25 million) to Proximity Data Centres Ltd., a regional UK co-location edge services firm.

Proximity Data Centres said the money will help fund its planned £80 million ($99.99 million) rollout of edge data centers – with the ultimate goal of building up to 18 facilities. Proximity is pushing to have data centers within range to serve 95 percent of the British population. Thus, Proximity is aiming to be a provider positioned at the aggregation edge layer, in the parlance of the Open Glossary of Edge Computing. It would not be considered a direct competitor to the likes of EdgeMicro or Vapor IO, for instance.

In a still somewhat uncommon deal setup, Proximity’s investment comes from real estate money. Real estate investors remain overall cautious around data center infusions.

Intermediate Capital Group’s real estate asset management unit, ICG-Longbow, actually made the placement, drawing from a £929 million ($1.2 billion) partnership capital fund, ICG-Longbow UK Real Estate Investments V SCSP.

A release touting the deal notes that ICG-Longbow has made previous investments in data center companies. Still, the real estate investment fund typically looks for opportunities across alternative economic sectors as well as office building rehabs and redevelopments.

Analysis

Proximity is touting itself as an edge colocation provider that will enable its customers to get closer to their customers and regional offices. It is targeting both the public and private sector – from CSPs and CDNs to general industry and financial services as well as those providing gaming services.

Proximity is looking to the future to serve IoT and other applications where speed is essential – but there is no consensus yet as to whether the UK will need such edge data centers given its size, population density and network connectivity. Proximity has made no mention of any customers and it must be hoped that it hasn’t pursued a ‘build it and they will come’ course, and if it has, that it has the necessary funds to be in for the long-haul as it could be a while before it can get meaningful traction.

Sacha Kavanagh, Analyst, Structure Research

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