The data center landscape is booming for both investment and innovation. This article explores the trends, challenges, and opportunities in how the market is shifting in line with this unprecedented growth.
Constructive Fiscal Policy Encouraging Further Investment
After interest rates peaked in 2023, the Federal Reserve started reducing rates in September, with a half-point cut followed by two quarter-point cuts. Amidst these fiscal policy changes, investors are debating what impact the new administration may have on trade, regulation, tariffs and tax policy, which could reshape the outlook for growth in the coming years. In particular, President Trump has promised to rapidly approve electrical infrastructure projects, from which the data center sector would significantly benefit given the current power and grid constraints nationally. Power development and data center demand remain at the forefront of investors’ minds entering 2025 as they look to meet the demands of a rapidly growing digital economy.
M&A and Public Market Activity Remains Strong in the Sector
The data center industry has seen a flurry of M&A activity, with 2021 marking a record year. CyrusOne, CoreSite, and QTS all went private, representing over 35 billion USD in transaction value. While the pace of M&A has since normalized, with 2022–2024 combined activity equaling the 40 billion USD total from 2021, the market’s resilience highlights the ongoing strength of the sector.
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ABOUT THE AUTHOR
Ross Widham has over ten years of experience in investment banking and advising clients in the data center, tech-enabled services, broadband, and wireless sectors. During his career at Bank Street, he has executed transactions across several continents, including North America, Europe, Asia, and Africa.
Notable transactions on which Widham has advised include Argo Infrastructure’s majority recap of TierPoint; the sale of Quintillion to Grain Management; the minority equity investment in GeoLinks by JLC Infrastructure; the sale of Tonaquint Data Centers to DIF Capital Partners; the sale of INAP’s colocation and network businesses to Evocative and Unitas Global, respectively; the 2 billion euro sale of ETC Group to Cinven; the sale of Involta to The Carlyle Group; the sale of DataGryd to Cordiant Digital Infrastructure; the 343 million USD take private of Alaska Communications by ATN International and Freedom 3 Capital; the sale of Matrix Data Center to SBA Communications; the sale of 365 Data Centers to Stonecourt Capital; the investment by Beech Tree Private Equity in Performanta; the sale of JAX NAP to SBA Communications; the sale of mindSHIFT to Ricoh; the merger of HOSTING and Hostway; the sale of CMC Networks to The Carlyle Group; and the sale of Liquid Web to Madison Dearborn Partners.
Widham has a BA in Finance from The George Washington University in Washington, DC.
