KKR goes big on data with $1bn equity investment and new partnership

The NY-based firm is investing in data centres for the first time through its infra platform, backing the launch of Global Technical Realty, which will focus on the European market.

KKR will invest $1 billion in equity in Global Technical Realty, a data centre platform founded by Franek Sodzawiczny, to build and operate data centres in Europe.

According to a statement, KKR will fund the deal “primarily” through Global Infrastructure Investors III, a vehicle it closed on $7.4 billion in September 2018. It marks the firm’s first investment in the sub-sector through its infrastructure platform.

The firm said in the statement: “Alongside debt financing, KKR’s equity commitment is expected to support more than $2.5 billion of asset development investment, including opportunities from a highly active commercial pipeline as the demand for third-party data provision continues to grow.”

The two parties did not disclose the equity split between them nor the other sources KKR will use to fund the equity investment. KKR declined to comment beyond the press release.

In terms of the debt financing, KKR expects to raise around $1.5 billion through KKR Capital Markets, which arranges debt and equity financing for the firm’s transactions as well as those of third parties, once GTR has built up a project pipeline, a source told Infrastructure Investor.

GTR, which will be headquartered in London, will consider acquiring existing data centres, but its main focus will be on development and construction, building these centres based on demand from clients with whom KKR has existing relationships, this person said.

Geographically, GTR will target markets where there is established third-party data centre provision in places such as London, Dublin and Amsterdam. But the company also sees opportunities in Italy, Spain and Poland – markets where there is likely to be growing demand in the future but where data provision is less developed at the moment, according to the source.

Sodzawiczny, previously founder and chief executive of Zenium Data Centers, will serve as chief executive of the new company. He will be joined by a management team that includes Martin Carroll, former lead director, EMEA data centre advisory at JLL; Mark Trevor, former partner and head of EMEA data centre transaction and advisory at Cushman & Wakefield; and Tom Sodzawiczny, former associate director of capital markets at Colliers International.

Other assets comprising KKR’s Global Infrastructure Investors III portfolio, include ADNOC Oil Pipelines, a joint venture with SemGroup to acquire midstream services in Canada, Texas-based Discovery Midstream, aircraft leasing company Altavair and French telecoms tower business Starlight.

As at 31 March, the fund was roughly 36 percent deployed, the firm said earlier this month when it announced its Q1 results.