KKR & Co. plans to put $1 billion into a new data center venture in Europe, according to people familiar with the matter, as private equity firms chase returns in the growing market for digital infrastructure assets.

The investment firm is teaming up with industry veteran Franek Sodzawiczny to launch Global Technical Realty, which will develop and build data centers for large technology companies in Europe, the people said. The venture could be announced as soon as Wednesday, they said, asking not to be identified as the matter is private.

Data centers are drawing increasing interest from private equity firms as more companies outsource the storage of vast information sets to third-party providers. Macquarie Group Ltd., Digital Colony and EQT AB are among investors that have done deals in the sector.

Sodzawiczny, who previously founded Zenium Data Centers, will become chief executive officer of GTR, according to the people. Zenium received backing from billionaire George Soros’s Quantum Strategic Partners Ltd. and was acquired by CyrusOne Inc. in 2018.

KKR is committing capital from its third global infrastructure fund to GTR, which will be able to deploy more than $2.5 billion to building new data centers including debt financing, the people said. A representative for KKR declined to comment.

There were more than 100 mergers and acquisitions involving data centers announced last year, the highest tally on record, according to Synergy Research Group. Private-equity dealmaking in the industry increased 50%, Synergy data show. Digital Colony and EQT agreed in May last year to take Zayo Group Holdings Inc. private in a deal valuing the fiber network and data center operator at about $8 billion.

Infrastructure managers, flush with investor cash, are also looking to capitalize on the trend. Real estate investment trust Digital Realty Trust Inc. agreed last year to buy Interxion Holding NV, which provides data centers and colocation services to electronic traders, for roughly $7.15 billion.

Source: Bloomberg

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