Connecting the physical and digital world one investment at a time

Siemens Financial Services deploys capital to support increased demand in the data center industry

As the data center industry’s growth trajectory continues, capital needs – which, prior to COVID-19, were rapidly increasing driven by the proliferation of the cloud migration – maintain their upward trend as organizations face a decentralized workforce pushing computing needs to the ‘Edge’. When data centers are closer to the Edge, it means they are physically closer to the end user. This can help decrease latency and increase security and uptime for data center customers, who operate outside major, centralized network hubs.

 

DataBank, a leading provider of enterprise-class colocation, connectivity, and managed services, operates on the Edge by providing reliable colocation data storage, processing, and computing to many customers under one roof.  In September, DataBank announced its planned acquisition of zColo from Zayo Group Holdings, creating one of the largest privately-held data center operators in the U.S. led by DataBank's lead investor, Digital Colony, the digital infrastructure arm of Colony Capital, Inc. 

 

With this acquisition, DataBank is positioned as a leading provider of edge colocation and connectivity solutions – transforming from a regional specialist into one of the largest U.S. data center operators with 64 data centers, 1.2 million square feet of data center space, and 138 megawatts of capacity (Data Center Frontier, Nov 11, 2020).

 

Siemens Financial Services (SFS) – the financing arm of technology giant Siemens – is deploying capital in this growing asset class, joining several other investors – such as Nuveen – in support of DataBank. 

SFS is a great addition to the investor group given its ability to provide flexible equity capital to the DataBank platform to support this acquisition as well as the company’s growth. Along with its financial strength, we look forward to a fruitful relationship with Siemens beyond capital as a strategic ally to help optimize DataBank’s portfolio by leveraging broader Siemens know-how and its extensive offering to the sector.
Justin Chang, Managing Director and CIO Digital Balance Sheet at Colony Capital

SFS’s investment in DataBank marks its second recent data center-related transaction, having closed a construction loan for a hyperscale data center project in Virginia earlier this year.

“As we look to diversify our capital into the broader infrastructure sector, investments into platforms like DataBank – with strong fundamentals and an experienced management team led by industry veteran Raul Martynek – alongside renowned digital infrastructure experts, Colony Capital, position SFS to not only capitalize, but support this growing sector,” Jason Thompson, Director – Equity from SFS commented. 

 

“This investment is congruent with Siemens’ broader objective of connecting the physical and digital world, with underpinnings from the migration to the Cloud trend and an increased need for low-latency / high-bandwidth networks positioned in Tier 2 and 3 Edge markets,” he continued. 

 

On the Edge, the Cloud lives in colocation, with its purpose-built data centers, such as the ones in DataBank’s portfolio, that are not only more efficient, but also offer higher interconnectivity providing a more competitive offering to the customer. Colocation has the added benefit of having many clients under one roof with network providers, allowing for the ability to physically meet, while also benefiting from the economies of scale of shared infrastructure.

 

In addition to SFS’s investment, Siemens and an affiliate of Colony Capital also entered into a Cooperation Agreement, marking the potential for broader collaboration between the two firms. Driven by the challenges data centers face as the factories of the 21st century, Siemens has pooled its vast expertise and experience across several disciplines into a comprehensive suite of solutions and services for data centers, to help operators to better build and manage their infrastructure. Siemens solutions and services help maximize the uptime, reliability and efficiency of data centers while optimizing management of the infrastructure operations and delivering specific solutions for its automation and control, fire safety, security and power distribution. Siemens recognizes that sustainability is a growing challenge for data centers and offers innovative solutions in the distributed energy space through its Distributed Energy Systems (DES) unit as well as its distributed energy partnership, Calibrant Energy and its storage venture, Fluence.

 

As a knowledgeable advisor and investor with extensive experience in financing growth, SFS works with clients to craft a financing solution that fits their specific needs. Through the ecosystem – networks of experienced companies, investors, and technological experts – established by SFS, we look to add value to each opportunity via cross collaboration not only across Siemens, but within SFS’s diversified investment portfolio and relationships.