Brookfield and Ontario Teachers’ acquire Compass Datacenters in $5.5 Billion Deal

Compass Datacenters is set to be acquired by a consortium led by Brookfield Infrastructure Partners and Ontario Teachers’ Pension Plan, an existing investor in Compass. The enterprise value of the deal is estimated to be around $5.5 billion.

Compass Datacenters has operations in the US, Canada, and Europe, providing services to hyperscale customers. The consortium expects Compass to experience a rapid growth trajectory, buoyed by strong operational and financial support from the new ownership structure.

“With the acceleration of technology adoption and advent of emerging technologies such as generative AI, we expect that demand for world-class and sustainable data centres will continue to grow in the coming years,” said Ashvin Malkani, a Senior Managing Director at Ontario Teachers’.

Skyrocketing demand in the data centre sector

The data center sector has recently witnessed a surge in acquisitions, driven by the exponential global growth in the need for data storage, especially with the rapid expansion of cloud computing and advent of new technologies like generative AI.

“The need for data storage continues to grow at an exponential rate across the globe, and Compass complements our existing platforms in South America, Europe and Asia Pacific,” said Sam Pollock, CEO of Brookfield Infrastructure.

Big tech companies such as Microsoft and Meta are planning significant investments in new data center facilities, further underscoring the growing importance of data storage infrastructure.

The deal dynamics

Despite the transition in ownership, the current leadership at Compass Datacenters will remain unchanged. Chris Crosby, Founder and CEO of Compass, along with the existing management team will continue to lead the company following the expected transaction closure by the end of 2023.

“The industry is at a critical inflection point today with AI and cloud demand continuing to fuel significant growth. With Brookfield Infrastructure and Ontario Teachers’ strategic expertise and deep financial resources, Compass is ideally positioned to meet growing demand for hyperscale data centres and campuses,” said Crosby.

The deal was hotly contested between Brookfield Infrastructure and DigitalBridge Group Inc. The agreement also included existing owners, RedBird Capital Partners and the Azrieli Group.

RedBird’s original thesis around Compass was building a world class data center platform focused on global hyperscale customers through the development of customised campuses.

“Over a series of success-based investments that enabled disciplined growth, we executed against this thesis and built Compass into one of the preeminent global data center platforms,” said Tyler Alexander, Managing Director at RedBird.

The financial advisors for the deal were Goldman Sachs & Co. LLC and Guggenheim Securities, LLC for Compass and RedBird, while Brookfield Infrastructure engaged BMO Capital Markets and Scotiabank, with Ontario Teachers’ Pension Plan advised by TD Securities.

Back in April, acquired a majority stake in Data4 earlier this year. The deal, reported by Reuters, valued the European data centre operator at approximately $3.8 billion, including debt.

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