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October 22, 2020
In May of 2018, when Scott Peterson left Digital Realty Trust, the company he-cofounded in 2004, Digital was the world’s second-largest data center provider by revenue. He was the key architect behind the giant’s industry-changing deals including the $7.5 billion acquisition of DuPont Fabros and the $1.9 billion acquisition of Telx.
This week he announced his latest deal. Together with fellow Digital alumni Christopher Kenney and Stephen Taylor, he has formed Global Compute Infrastructure, a joint venture with Goldman Sachs, to build a new global data center platform.
With Goldman’s backing, Global Compute plans to buy and build digital infrastructure assets, including data centers and network infrastructure, and provide infrastructure services to cloud providers and other large customers.
“We’re not looking to build a little Digital Realty,” Peterson, the new company’s CEO, told DCK. “We are looking to execute investments in, broadly speaking, the data infrastructure space, but in reality, most of it will be in data centers.”
Goldman’s Merchant Banking Division has committed up to $500 million to the venture from its infrastructure fund, West Street Infrastructure Partners III. But the $500 million is just a “lever number,” Peterson said. “We’ll grow far beyond that.”
According to Goldman’s announcement of the deal, the initial commitment will enable about $1.5 billion in near-term investments by Global Compute.
Peterson and his two ex-Digital partners all invested in the JV and share control of the company with Goldman, he said. He declined to disclose individual ownership percentages.
The venture has already made its first acquisition, which he said could be viewed as a model for other deals it’s after. It has acquired ATM, the incumbent data center and communications services company in Poland, one of today’s hottest emerging markets for digital infrastructure.
While it won’t pass up good opportunities in North America, Global Compute’s immediate focus will be on primary and secondary markets in Europe, Asia Pacific, and Latin America.
ATM, which owns data center and fiber assets concentrated in Warsaw, was attractive because of its status as the dominant player in its market, its capable management team, and the team’s desire to expand.
“What they really need is growth capital and a little more experience from people who have executed on a global scale,” Peterson said.
While there’s no shortage of big investors who are eager to put money in digital infrastructure nowadays, experienced teams that have shown they can execute on a global basis are scarce. Peterson isn’t shy about pointing out that he and his partners are one of those teams.
“We’re a [much] better partner than somebody that just shows up with money,” he said, referring to the frenzy of M&A deals the sector has seen in recent years, fueled to a great extent by new entrants, including traditional infrastructure investors, pension funds, and sovereign funds. “There’s no other team on the planet that has [our] level of experience.”
Kenney, Global Compute’s COO, was a founding partner of GI Partners, the private equity fund whose assets were taken public in 2004 under the name Digital Realty Trust. His most recent position at Digital was senior VP.
Taylor, now Global Compute’s head of Europe, left Digital about one year ago after serving for more than seven years as its VP acquisitions and investments. He spent 10 years at CBRE prior to that.
Goldman was attractive as a partner because of its global scale. Peterson “started talking with Goldman about a year ago and then got very serious with them beginning of this year,” he recalled. He had spent some time looking for a partner with a global platform and network in addition to deep financial resources.
“These guys operate globally, so they can help us out with relationships,” Peterson said.
Global Compute’s product strategy will be focused on data center space and connectivity for large customers. While he didn’t rule out potentially adding some higher-level products, such as cloud or managed services, sometime down the line, there are plenty of business opportunities just for core infrastructure assets into the foreseeable future.
“We’ve got a very active pipeline. We have a lot of ideas,” Peterson said. “We expect to be out working on other transactions right away. There’s a lot of market opportunity.”