M&A activity in the data centre sector (businesses and property) generated more than US$12.3 billion in deal values globally in 2011. The most active market is the USA followed by the UK and Australia. In a review of finance and investment in the data centre sector, consulting firm BroadGroup assessed all publicly available data across M&A and fund raising activity.
Around 45% of all M&A deals were below US$100 million, with a further 25% valued up to US$250 million. But the year was dominated by mega-deals including the KKR, Silver Lake and Technology Crossover Ventures acquisition of hosting and domain provider Go Daddy at US$2 billion and the CenturyLink merger with Savvis valued at an estimated US$2.5 billion. The merger creates a new international player, with 48 data centres in North America, Europe and Asia.
The survey also found that a further US$6 billion had been raised in a range of funding rounds and IPOs. Almost half of all transactions were between US$100 million and US$700 million. Around half used debt financing instruments. J.P. Morgan Chase Bank/J.P. Morgan Asset Management led with the highest number of deal arrangements, followed by RBC Capital Markets and Barclays Capital. Morgan Stanley and Seaport Capital were in joint third position. NYSE listed Digital Realty has achieved top deal of the year raising US$1.5 billion in a Global Senior Unsecured Revolving Credit Facility in November, followed by Global Switch with a bond issue of €600 million in April 2011.
“We believe that when we add these figures to the additional investment that has been made in extending, upgrading and constructing data centres the financial scale of the sector has shifted substantially in 2011,” commented BroadGroup. “The overall market is generating a significant level of cash and stakeholder value and 2012 looks set to be another significant year"
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