Global investment firm EQT agreed to buy EdgeConneX, a large data center provider, from investors including Providence Equity Partners.

Financial terms weren’t announced, but Private Equity News’ sister title Barron’s has learned that EdgeConneX sold for $2.5bn to $3bn. Providence Equity, the largest shareholder, is exiting the deal, along with Brown Brothers Harriman. Other investors include Comcast Ventures, Cox Communications Venture Group, Liberty Global, Meritage Funds, True Ventures, and TDF Ventures. The transaction is expected to close in the fourth quarter.

“We fully expect EdgeConneX will continue its momentum and success as the company enters this next chapter,” said Christopher Ragona, a Providence Equity managing director, said in a statement.

EQT and management are buying all of the company, said EdgeConneX Co-Founder and CEO Randy Brouckman. “Management is committed. We believe in the company, we believe in the space, we believe in the customers,” Brouckman told Barron’s. “We are all fully engaged and along for the next chapters.” No job cuts or management changes are expected, he said.

EdgeConneX, of Herndon, Virginia, builds and operates data centers for cloud, content, network, and other service providers. The company has more than 40 data centers in over 30 markets in nine countries. Customers include Akamai Technologies, Microsoft, and It employs roughly 150 people.

EdgeConneX has been up for sale since 2019. Bloombergoriginally reported that it was in talks with EQT back in October 2019, but the deal was canceled. The auction didn’t end but was “extended into 2020 as new entrants came in,” Brouckman said. He declined to disclose any parties involved in the EdgeConneX process.

The EdgeConneX auction went on hold for about four weeks when Covid-19 began upending the US stock market in the spring, Brouckman said. Volatility due to Covid-19 pandemic caused mergers as a whole, as well as initial public offerings, to go on hold. The US stock market has since rebounded, which has caused a resurgence in IPOs, while some mergers, including several large transactions, have gotten done this summer.

During the pause, it was “hard to make capital commitments because there was a lot of uncertainty,” said Jan Vesely, an EQT partner. Negotiation for EdgeConneX switched to virtual meetings, executives said. EQT has known the EdgeConneX team for years and has met them “at least 20 times,” Vesely said. “Personally, I find going virtual works really well with people you know. It doesn’t work very well with people you don’t know,” he told Barron’s.

Vesely, however, admitted that it’s “hard to replace going out to dinner with a Zoom call.”

The Stockholm private equity firm has done other digital infrastructure deals including buying Zayo Group in March and Segra in 2017. EdgeConneX is EQT’s first pure play data center investment, Vesely said. “We’re incredibly happy,” he said. “We think this is the best platform in this industry …It’s an ideal fit for us, not only with their exposure to the cloud endmarkets but their geographic diversity across North America and Europe. We are uniquely positioned to help them grow in Europe and we will continue growing the business in the U.S.”

EQT is using its fourth infrastructure fund, which raised €9bn in 2019, to buy EdgeConnex. With the acquisition, the firm said EQT Infrastructure IV is 80% to 85% invested. The firm has begun fundraising for its fifth infrastructure fund, which has a €12.5bn target.

“Telecom infrastructure continues to be a strategic asset, is an important part of how we meet the needs of our Cox Business customers and something that we’ll continue to explore when investment or acquisition opportunities arise,” a spokesman said.

David L. Solomon, managing partner of Meritage Funds, said his firm invested $15m in total in EdgeConneX. “It was quite a nice return,” he said.

Qazi Fazal of Evercore provided financial advice to EdgeConnex while Katie Sudol, Andrew Blau and Lori Lesser of Simpson Thacher & Bartlett acted as legal counsel to EdgeConneX. Goldman Sachs acted as financial advisor to EQT and Kirkland & Ellis was their attorney.

Source: Barron’s 


By Luisa Beltran

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