In the ever-evolving digital landscape of Europe, the data center sector stands on the brink of a significant investment boost in 2024. This insight, drawn from Mergermarket’s latest analysis, highlights the burgeoning opportunities and trends within the data center market over the past four months. As digital information storage and hosting demand skyrocket, largely fueled by the advancements in artificial intelligence (AI), cloud computing, the surge in online connectivity, and cryptocurrency mining, investors are eagerly looking to tap into this lucrative sector.
Anthony Yaneza, a Director at Houlihan Lokey’s Digital Infrastructure Team, notes a marked uptick in demand for data centers driven by hyperscale AI and cloud needs worldwide. This surge is prompting a shift towards larger data center projects, with operators increasingly seeking new capital avenues through equity and debt to fuel growth. “This trend is expected to keep data-center mergers and acquisitions (M&A) and deal flow robust, attracting strategic and investment capital,” Yaneza elaborates.
Despite a downturn in overall EMEA M&A activities, the data center segment remained resilient in 2023, with transactions amounting to approximately EUR 2.65 billion, mirroring the previous year’s figures. Notably, the sale of Data4 by AXA IM Alts to Brookfield stood out among the largest deals in this space.
The market is buzzing with investment activities, including Yondr Group’s exploration of a minority stake sale in its European assets, potentially raising over EUR 1 billion. Similarly, Photon Capital is considering an equity raise for its data center portfolio company, Penta Infra, aiming for EUR 1 billion to EUR 1.5 billion.
The landscape is ripe with expansion endeavors, from large-scale hyperscale facilities to regional edge data centers. Yaneza also anticipates continued interest from telecommunications and service providers in divesting non-core data center operations.
Noteworthy is the potential sale of GlobalConnect’s data center business by EQT Infrastructure, which could fetch valuations around 20x EBITDA. Other significant moves include preparations by Asterion Industrial Partners and Telefonica for the sale of Nabiax, and efforts by Iliad to divest its data center subsidiary, Opcore.
Investor interest isn’t limited to pure data center operators. Unified communications and IT service providers owning physical data center assets are also attracting attention. ARO and Indigo Telecom are among those eyeing the market, with the latter scoring a 58 out of 100 on Mergermarket’s Likely to Exit (LTE) predictive algorithm, indicating a potential sale.
In a detailed look at upcoming deals, ARO is on the sales block, with MML Capital Partners seeking to divest the unified communications and IT services provider. GlobalConnect is initiating a sale process for its data center operations, with a formal process expected to launch soon. Additionally, the sale of DigitalWell, Yondr Group’s European data center operations, and Indigo Telecom’s exploration of sale options underscore the sector’s dynamic nature.
As the EMEA data center market braces for a dealmaking surge in 2024, the synergy of technological advancements and investor interest paints a promising future for the sector, highlighting its critical role in supporting the digital economy’s backbone.
