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TierPoint secures $320 million to expand regional edge data centers

Categories Edge Computing News  |  Funding  |  Real Estate
TierPoint secures $320 million to expand regional edge data centers

TierPoint has secured $320 million in funding, following an investment round which included a number of interested companies, the company announced. The process is to be finalized by mid-April.

The funding round was led by new investors Argo Infrastructure Partners, Wafra, and Macquarie Capital Principal Finance. Current investors including Cequel III, Ontario Teachers’ Pension Plan, RedBird Capital Partners, The Stephens Group, and Thompson Street Capital Partners were also present.

“In the last two years, we’ve increased sales bookings by 26 percent and the first quarter of 2020 will be another outstanding growth period,” said TierPoint Chairman and CEO Jerry Kent, in a prepared statement. He noted the company has a very strong balance sheet, improved liquidity, and with the infusion of growth capital, and Kent hopes will help deliver “a long runway of growth ahead of us, as we continue to invest in our services, infrastructure, and people.”

According to State of the Edge 2020, $700 billion is forecast to be invested in data center and edge infrastructure spending in the next decade, while some $146 billion will be spent annually on edge IT and data center technology by 2028, rising by a 35% CAGR. While data centers are making plans for upgrades, in 29% of cases the facilities they have available do not meet business needs.

With IoT speeding up business transformation, edge data centers reduce wait time and help companies decrease latency generated by data-intensive requests. Edge data centers improve processing speed by placing the data closer to end users.

TierPoint currently has more than 40 data centers in tier 2 and 3 markets, making TierPoint a player in the aggregation edge layer of data center infrastructure. By comparison, startups like Vapor IO, Edge Micro, and others are aiming to offer multiple smaller facilities within those markets and even at the access edge where cellular towers connect to base stations.

As explained in an article by TierPoint Director of Product Management, Dominic Romeo, “When you’re inside a 50-mile radius, latencies get really, really low. The time it takes for the end-user to send a command to the server and for the server to come back with a response are in the neighborhood of single-digit milliseconds versus double- or triple-digit milliseconds of round-trip time. That can have a tremendous impact on productivity and the customer experience.”

During negotiations, TierPont received financial advice from Citi and DH Capital, while RedBird Capital Partners was advised by Goldman Sachs. TierPoint will use the net income to further invest in growth capital and repay its second line credit facility in full.

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