The Goldman Sachs Merchant Banking Division is forming a global data center infrastructure platform.
The division is partnering with long-time data center industry executive Scott Peterson and a seasoned management team to launch Global Compute Infrastructure. It initially committed to fund up to $500 million of equity capital, primarily from its infrastructure fund, West Street Infrastructure Partners III, LP, to enable approximately $1.5 billion in near-term investments deployed across North America, Europe, Asia Pacific and Latin America.
Goldman Sachs says Global Compute intends to grow through a combination of acquisitions and organic development to serve customers in geographies with strong tailwinds and potential for significant data infrastructure growth. Global Compute will target the acquisition and development facilities that can meet the growing compute, storage, connectivity and colocation deployment needs of the world’s largest technology companies.
Already, Global Compute has entered into the growing Central and Eastern European data center market by signing an agreement to acquire ATM SA, a data center and communications infrastructure business in Poland, from a consortium of funds managed by MCI Capital and Mezzanine Management. Headquartered in Warsaw, ATM’s data center assets, communication infrastructure footprint, customer base and reputation in the market provide Global Compute with an entry point into Central and Eastern Europe.
Peterson, the former Chief Investment Officer and co-founder of Digital Realty, has more than 18 years of data center industry experience and more than 30 years in the real estate investment arena. The Global Compute team will also include Digital Realty co-founder Christopher Kenney as COO and former senior Digital Realty executive in EMEA, Stephen Taylor as head of Europe.
“We see a tremendous opportunity in the data center space driven by increasing computing and storage demand, and we believe the Global Compute team, backed by the global resources of Goldman Sachs, is uniquely positioned to deliver world-class solutions to meet that demand,” said Leonard Seevers, managing director at Goldman Sachs in a prepared statement.
Goldman Sachs’ move into data centers comes amid strong performance of the asset class. Data center REITs outperformed other sectors amid the pandemic in total returns, due to immediate demand for e-commerce and virtual connectivity, according to NAREIT.
The pandemic has also given the sector a boost as public safety and stay-home orders led to increased demand for digital connectivity. And in a recent report, JLL noted that operators’ revenue backlogs will fuel growth toward year-end and early 2021. Even with an immediate need for capacity for cloud services, users and operators paused and delayed deals when the pandemic struck. As rent compressed and competition increased in the US, operators are pursuing greater returns and locating where users are expanding, which is in Western Europe.