DCK Investor Edge: The Rise and Rise of Vantage Data Centers | Knowledge of data centers





The evolution of Vantage Data Centers as the hyperscale platform company for DigitalBridge (DBRG) is also the story of how Vantage CEO Sureel Choksi had to constantly adjust his strategy.

The rise of Vantage over the past six years is truly impressive. In 2016, Choksi focused on the challenges of expanding in Santa Clara, California, to provide additional space for existing and new customers. However, Vantage’s main investor, Silver Lake Partners, had been looking for an exit strategy for about eight months.

Silicon Valley was – and remains a high barrier to entry into the data center market, allowing both development and large-scale leasing to be “lumpy” year after year. The next Vantage project was a data center campus in Quincy, Washington.

But the tipping point came in early 2017 when the company was bought from Silver Lake Partners by a consortium that included Digital Bridge Holdings (a leading global communications infrastructure company), Public Sector Pension Investment Board (PSP Investments) and TIAA Investments, a subsidiary. van Nuveen, who made the investment on behalf of TIAA’s general account.

The Vantage acquisition came a few months after Digital Bridge acquired DataBank, a colocation-focused retail operator, which was the original data center platform company. To drive Digital Bridge’s data center strategy, CEO Marc Ganzi brought on board Michael Foust, co-founder and former CEO of the world’s largest wholesale data center provider, Digital Realty Trust. Foust is chairman of DataBank and also chairman of the board of directors of Vantage.

In an interview with DCK, Choksi said he felt “relieved and excited” to partner with Digital Bridge and Foust. He said the deal was “the ideal scenario” as existing Vantage management, employees and customer relationships all remained in place.

The due diligence process surrounding the deal showed Digital Bridge that Vantage “promised too little and delivered too much,” Ganzi said in an interview with Knowledge of data centers in 2017. “Ultimately, Vantage will be able to expand if customers are confident and willing to follow Vantage into other markets to help meet future capacity needs.”

Fast-forward to March 2022, and Vantage now operates 26 data center campuses across five continents. Here’s how it happened.

Scaling the Vantage platform

In a way, Vantage hasn’t stopped growing since Digital Bridge “reset the shot clock” in 2017.

Digital Bridge’s capital injection has enabled the company to make long-term plans to expand beyond its Silicon Valley data center footprint, to evaluate Ashburn, Virginia’s “Data Center Alley,” and other leading US wholesale data center markets. Land was purchased in Northern Virginia, and Vantage broke ground on the campus once the rights were secured.

The 42-acre Ashburn campus was originally planned for five buildings and 108 MW of critical IT load when fully expanded – current plans are for 146 MW. The first phase consists of a 230,000 square meter facility that will provide 24 MW of critical IT load and a central utility for the project.

It would require an additional $1 billion in capital to complete this campus. In February 2018, Vantage announced the issuance of $1.25 billion in securitized bonds, a first for the data center industry. The company did this again in 2020, raising $1.3 billion.

In June 2018, Vantage broke ground on “CA2,” a 77MW campus in Santa Clara, to provide space and power to customers as the old campus was almost fully leased.

In January 2019, Vantage announced a 50-acre campus in Goodyear, Arizona (which is part of the larger Phoenix data center market). The campus is planned for 160MW when fully expanded.

In February 2019, Vantage completed construction of the first phase on the campus in Ashburn, VA, with 6 MW of IT capacity.

International growth begins

However, in January 2019 there was another announcement. Vantage expanded into Canada by purchasing 4Degrees Colocation, which immediately put it on the map and room to expand in both Montreal and Quebec City.

In January 2020, Vantage announced its first expansions outside of North America. A total investment of $2 billion to fund the purchase of Etix Everywhere (primarily to obtain a 55MW site in Frankfurt, Germany). The acquisition of Etix, along with the new developments, gave Vantage an immediate presence in Berlin, Milan, Warsaw and Zurich.

In July 2020, Vantage had another blockbuster announcement, this time in the UK. It bought Next Generation Data (NGD) assets, including a 180 MW campus – the largest in Europe.

Additionally, in July 2020, ColonyCapital and Vantage announced a $3.5 billion strategic partnership to fund the growth of Vantage’s data centers in North America and Europe.

In September 2020, Vantage announced expansions in Ashburn and Silicon Valley for a total of 68 MW of IT capacity.

Another blockbuster announcement in November 2020: the acquisition of Hypertec’s hyperscale data center business, giving Vantage three campuses in the province of Quebec with a total IT capacity of 81 MW.

Fast forward to September 2021, and Vantage announced its initial investments in the Asia/Pacific region. The company entered five additional markets with the acquisition of Agile Data Centers and the planned acquisition of the PCCW data center business.

In October 2021, Vantage announced its first development in Africa, opening the first phase of an 80MW data center campus in Johannesburg. The design is for three two-storey data center buildings.

In December 2021, Vantage completed the acquisition of the PCCW data center. This gives the company 100 MW of data centers and expansion capacity in Hong Kong and Kuala Lumpur.

Recently, Vantage announced a CAD$900 million expansion of its existing campuses and plans to fund a third data center campus in Montreal.

DCK Investor Edge

I rarely write “listicle” style articles. In this case, however, I struggled to understand Vantage’s rapid expansion under the DigitalBridge (DBRG) umbrella. Now we have a timeline of key deals to reference in the future.

When we spoke to Choksi, CEO of Vantage, earlier this week, he told us, “Financing has been a full-time job for the past five years and DigitalBridge has been an incredible support to us.” In fact, the DigitalBridge relationship was a match made in heaven from his perspective.

Marc Ganzi, CEO of DigitalBridge, has assembled an impressive collection of portfolio companies across the digital infrastructure landscape. In addition to Vantage and DataBank, his vision on converged digital infrastructure also includes cell towers, fiber optics, small cells. Particularly among the fiber assets, Ganzi chose to buy Zayo and take it private. During the interview, Choksi reminded me that he is on Zayo’s board of directors.

It seems that DigitalBridge has become a serious infrastructure player in just a few years. There is no real “peer” for investors to compare to DBRG. It has already become a serious competitor for both public and private companies.




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