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Infrastructure and the impacts of AI

Although data centres are nothing new to infrastructure investors (with the industry growing at over 20% annually pre-2021) the market is going through a stage of accelerated growth to meet the AI-driven demand.

Hyperscale vs. Colocation: this is not one size fits all

Hyperscale data centres frequently take the headlines in the world of data centres. The scale of these sites often goes beyond 10,000sqft and look to service large cloud service providers like Amazon, TikTok, Microsoft, and Google. Recent landmark deals include a $7 billion hyperscale venture between Digital Realty and Blackstone and in Europe, AustralianSuper invested €1.5 billion into Vantage data centres. At the other end, the Colocation market is providing ample opportunity for mid-market platforms to invest in scalable, localised sites that meet the needs of organisations such as medium-large enterprises, content and media providers, and cloud service providers. This is in addition to more traditional uses of hosting, managed services, and telecommunications companies. The ever-increasing demand for data has turned data centres and their most-often uninspiring locations on business parks into exciting investment opportunities for mid-market funds, a way for them to diversify into a growing technology trend with relatively less risk. The acquisition of the Danish colocation firm ‘Fuzion’ by CapMan Infra, Arcus’ investment in Portus data centres and InfraRed Capital Partners launching their new European data centre platform ‘NexSpace’ in Germany are all illustrations of this shift in focus and race to claim sites in this new investment territory.

Data centres and energy transition

Data centres of all sizes come with significant energy requirements. The surge in demand for power is occurring precisely as the world is trying to shift away from its dependency on fossil fuels. The demand for green power to sustain data centre growth poses great challenges as investors look for sustainable solutions to meet the energy transition. To mitigate against this, investors and operators alike are implementing a range of strategies, from power purchase agreements (PPAs) with renewable suppliers, investing in nascent lithium-ion battery storage, hydrogen and green ammonia storage systems and cooling technology to improve power usage effectiveness (PUE). The current lack of renewable capacity, coupled with AI's power-intensive nature, creates a bottleneck. The industry is on a tight timeline, and under immense pressure, to find solutions to the growing power demand whilst balancing environmental considerations. Operators who implement energy transition strategy represent a far more interesting proposition for potential investors.

The hiring market

Unsurprisingly, the boom in growth of this sector is propelling the demand for talent. Both large-cap and mid-market funds alike are eager to attract experienced professionals with tangible transaction experience in the Digital Infrastructure space. Clients in the sector are now focused on individuals with a demonstrable track record of originating and managing platforms within Digital Infrastructure. Senior professionals who have experience developing and scaling nascent data centre assets represent the most attractive skillset for investors looking to grow their team. Simultaneously, individuals with experience in the Real Estate sector are also highly sought after due to their experience in acquiring and developing greenfield sites from scratch. For candidates, the story is much the same. With fundraising in 2024 starting to show signs of green shoots, significant allocations are being made to digital strategies. Junior candidates with exposure to data centres and adjacent transactions (Fibre, Telco, Cloud as examples) are proving to be highly sought after. Whilst specialist platforms that look to take a singular approach are providing huge growth opportunities for candidates who are wanting to specialise early. The Digital Infrastructure sector is quickly becoming one of the most exciting markets to be working in right now, and I believe it will remain like this for quite some time. We are seeing a steady increase in the number of opportunities opening up with innovating teams leading the development of AI and ‘green data’. And for clients, our network of exceptional talent in the space is becoming richer with ambitious individuals with the niche experience required for success in these expanding markets.

If you are interested in working in the Digital Infrastructure sector, or your team is at the point of expansion and requires hiring support, reach out to me directly at thomas.amos@dartmouthpartners.com and we can take hold of the rising tide of AI together.


https://static.computerworld.com.pt/media/2022/06/Global-Data-Centre-Report-14-June-22.pdf https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/investing-in-the-rising-data-center-economy https://www.infrastructureinvestor.com/power-struggles-emerge-as-ai-fuels-data-centre-growth/ https://www.blackstone.com/news/press/digital-realty-and-blackstone-announce-7-billion-hyperscale-data-center-development-joint-venture/ https://vantage-dc.com/news/australiansuper-backs-vantage-data-centers-with-e1-5-billion-investment-and-joins-digitalbridge-as-key-shareholder/ https://capman.com/2023/09/capman-infra-invests-in-danish-data-centre-colocation-provider-fuzion/ https://www.datacenterdynamics.com/en/news/infrared-capital-partners-launches-new-european-data-center-platform/

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