DigitalBridge Group (NYSE: DBRG) announced the recapitalization of its portfolio company DataBank, a leading nationwide edge data center platform. The initial recapitalization stage is being structured as a sale of ownership interests to affiliates of Swiss Life Asset Management AG (SLAM) and EDF Invest (EDF). Under the terms of the agreement, SLAM and EDF will acquire 27 percent of the fully diluted equity interests in DataBank from existing investors for approximately $1.2 billion in cash.
Marc Ganzi, CEO of DigitalBridge, said, “Since we acquired DataBank in 2016, we have scaled its footprint, capacity and customer base in key metro areas across the United States, transforming DataBank from a business serving three markets with six facilities to the premier edge infrastructure platform serving twenty-seven markets across more than sixty-five facilities. The formation of this new permanent capital vehicle allows DigitalBridge shareholders to maintain significant exposure to the next phase of value creation at DataBank alongside our new co-investors while also freeing up significant capital at an attractive valuation to fuel additional digital M&A.”
DataBank along with Vantage Stabilized Data Centers are DigitalBridge’s two balance sheet investments that are managed under the company’s Digital Operating unit.
The transaction enables DataBank to execute a 10-year plan that takes advantage of edge infrastructure growth in the U.S. Since 2016, DataBank has progressively built an ecosystem of interconnect and data center locations in over two dozen Tier 1 and Tier 2 U.S. metros. That coverage serves as the geographic foundation of a more decentralized, next-generation internet infrastructure platform.
“This recapitalization allows us to accelerate our expansion efforts and capture the substantial secular growth in edge computing,” said Raul Martynek, DataBank’s CEO. “DataBank is strategically positioned as the leading platform to deliver and enable the network edge ecosystem as a shift from traditional centralized infrastructures continues to evolve to the edge,” he said.
DataBank enables global enterprises, technology, and content providers to consistently deploy and manage their mission-critical applications and data across a nationwide platform. DataBank’s digital infrastructure assets comprise more than 65 data centers, 20 interconnection hubs in more than 27 markets, on-ramps to an ecosystem of cloud providers, and a modular edge data center platform.
Ganzi added, “This transaction will catalyze the next phase of DataBank’s growth with a new group of marquee investors poised to benefit from the continued powerful infrastructure expansion at the edge and DigitalBridge’s track record and expertise investing across the digital infrastructure ecosystem.”
“This new investor group will provide the financial backing required to continue to scale DataBank’s leading edge infrastructure platform,” said Kevin Ooley, DataBank’s President and CFO. “Swiss Life and EDF’s long term outlook on the sector perfectly aligns with our view on the significant opportunity around edge demand.”
With this transaction as the initial recapitalization phase, DigitalBridge’s ownership interests in DataBank will be reduced to 15.5 percent. DigitalBridge will receive cash proceeds of $230 million, implying a pre-transaction net value of $906 million, including a retained net value of $676 million.
The recapitalization is expected to attract new investors interested in acquiring ownership shares in DataBank prior to the recapitalization’s completion that is set for Q3 2022, subject to customary closing conditions and regulatory approvals.
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