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The companies’ new joint venture will build four hyperscale data centre campuses in Frankfurt, Paris, and Northern Virginia
As we approach the end of 2023, the soaring global interest in AI shows no signs of losing momentum. From the growing risk of AI-related job cuts to drama surrounding OpenAI and the future of artificial general intelligence (AGI), there has rarely been a week in which AI have not dominated the tech publication headlines.
Now, as enterprises around the globe scurry to implement AI at scale, it seems the new technology is sparking something of quiet renaissance in an adjacent field: data centre investment. New AI-powered solutions will require ever greater processing power, with data centres increasingly viewed as prized long-term investments by private equity and infrastructure funds around the world.
Indeed, late last week it was announced that US investment firm Blackstone had partnered with Digital Realty, one of the largest data centre operators in the world, to form a new $7 billion data centre joint venture (JV).
The deal, backed by Blackstone-affiliated funds led by Infrastructure, Real Estate and Tactical Opportunities, will see the new entity build four hyperscale data centre campuses across three metro areas in Frankfurt, Paris, and Northern Virginia.
Combined, these new campuses will include the deployment of 10 new data centres, bringing an additional 500 megawatts of total IT capacity to the surrounding areas.
Of that capacity, 46 megawatts is already under construction, with the companies aiming to have deployed 100 megawatts in 2025 and the full complement by 2026.
“Data centres are experiencing once-in-a-generation demand growth, driven by cloud adoption and the AI revolution,” said Jon Gray, President & COO of Blackstone. “Digital infrastructure is one of our highest conviction investment themes as a firm, and this transaction with a trusted data centre operator in Digital Realty is another example of how we are investing behind this trend.”
Blackstone will hold 80% equity in the new JV, worth around $700 million of its initial capital contributions, with Digital Realty holding the remaining 20% stake.
As always, the deal is subject to regulatory approval. If given the green light, the partners expect to close the deal in two stages in H1 of next year.
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