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Australia’s largest pension fund is investing €1.5bn in one of the largest data centre businesses in Europe, as institutional investors plough billions into the digital infrastructure needed for cloud computing and the artificial intelligence boom.
AustralianSuper is making a minority investment in Vantage Data Centers at what sources said was an $11bn valuation, its first foray into data centres that is intended to kick-start a broader involvement.
The pension fund, which manages nearly $300bn in assets, is investing in Vantage’s Europe, Middle East and Africa businesses after its US private equity owner, DigitalBridge, hired advisers this spring to raise funds for the construction of new data centres, the two groups confirmed to the Financial Times. They declined to comment on the valuation.
Data centres, where stacks of servers and computing hardware are stored, have become favoured by investors over office buildings and malls because of the need among large technology companies like Microsoft, Facebook and Google to manage rising data demands.
The properties carry few outside aesthetic features but are coveted for customised details like complex cooling systems and their closeness to programmers handling data loads.
DigitalBridge itself highlights the shift towards the sector. The Florida-based investment group contains the remnants of Colony Capital, once a large investor in offices and luxury hotels, which was founded by Tom Barrack, an ally to former US president Donald Trump.
In 2019, Colony acquired data centre investor Digital Bridge Holdings and named its founder, Marc Ganzi, as Barrack’s successor. Ganzi promptly sold tens of billions of Colony’s real estate to fund new investments in data centres like Vantage Emea. The group was renamed DigitalBridge in 2021.
Vantage Emea is a collection of twelve data centre locations in European cities including London, Berlin, Zurich, Milan, Frankfurt and Warsaw. In London, Vantage is spending £750mn to build two centres, one near Park Royal and the other in North Acton, that are expected to be completed in late 2024 and early 2025.
AustralianSuper, which is being sued by its Australian regulator over its alleged failure to deal with multiple member accounts, said it is planning additional investment in Vantage.
“We expect that Vantage Emea will require more capital as part of our commitment here,” said Nik Kemp, head of infrastructure at AustralianSuper. The firm plans to “continue investing in this platform for many years,” he added. Kemp said the fund will also target properties owned by other private capital groups.
Jon Mauck, a senior managing director at DigitalBridge, predicted growth in the asset class would last for many years.
“This is a fundamental change in the economy,” he said. “We are in the early innings of a fairly long term growth outlook, whether it is the digitisation of the economy, the growth of the cloud, or the proliferation of AI.”
The deal is the latest sign that Australian pension funds, called superannuation funds, are looking overseas and towards private assets for growth.
The industry is the world’s fifth-largest pension system at A$3tn ($1.9tn) and has started to invest directly in companies and assets, having previously relied on specialist asset managers like Macquarie to lead investments.
The A$23.6bn sale of Sydney Airport represented a turning point for the superfund sector with a number of funds including AustralianSuper participating in one of the largest ever buyouts of a listed Australian company. Mobile towers, telecoms networks and data centres have also become targets for superfunds.
Deals have included the takeover of Australian telecoms and subsea cable company Vocus by Aware Super and Macquarie’s infrastructure arm, Australian Super and Singtel’s A$3.5bn purchase of Telstra’s mobile masts and UniSuper’s acquisition of a stake in Vodafone’s tower arm. Aware Super also paid $500mn to acquire a stake in DigitalBridge’s Switch asset earlier this year.
Additional reporting by Josephine Cumbo
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