Peak 10 Gets $60 Million in Funding
May 9th, 2008 By: Rich Miller
In the latest sign of growth for regional data center companies, Peak 10 has arranged $60 million in funding to support its continued expansion. RBC Capital Markets arranged the credit facility through a bank syndicate including GE Capital Corporation and CIT. Peak 10 says it will use the funding to build new data centers or possibly acquire other providers.
“Our expanded credit facility coupled with Peak 10′s strong internally generated cash flow fully funds our business plan,” said Brian Noonan, chief financial officer of Peak 10. “Our history of consistent quarterly growth and strong balance sheet management has enabled us to obtain debt on attractive terms with an expanded group of lenders. We are well positioned to pursue in-market and new market expansions, including acquisitions.”
Peak 10 was founded in 2001 and has focused on local markets in the southeastern U.S. IN addition to its own building program, Peak 10 acquired established data center companies in Louisville, Nashville and Richmond. Last fall the company opened a greenfield data center in Atlanta, and expanded into Cincinnati in December 2007. Peak 10 currently has construction underway on facilities in Nashville, Louisville, Raleigh, Tampa and Charlotte, and plans additional construction later this year and in 2009.
“This expanded credit facility sends a powerful message to our customers, namely that we have positioned Peak 10 to expand to meet their growth needs and technical service needs for the future,” said David Jones, president and chief executive officer of Peak 10. “At the same time, we remain aggressive with options to expand into more markets and to execute our strategic growth initiatives.”
Strong demand for data center space in mid-sized cities – often called “second tier” markets – has been a driver in recent mergers and acquisitions involving regional providers. A factor in these deals has been the capital-intensive nature of the data center business. Several recent acquisitions have involved a player with deep pockets – either a private equity firm or larger provider – stepping in to acquire the provider and fund additional data center construction. Some recent examples:
- ViaWest, a regional data enter chain based in Denver, bought Dallas provider Dataside and its seven data centers – five in the Dallas market and one apiece in Austin and Las Vegas.
- Hosted Solutions was acquired by ABRY Partners for $140 million. Hosted Solutions initially focused on the Research Triangle market, but expanded in 2006 when it acquired Boston Datacenters to enter the New England market.
- Managed Data Holdings, a data center holding company formed by two private equity firms, bought Data393. MDH also has acquired Los Angeles area managed hosting provider Intelenet, and is expanding data center space at both companies.
But Peak 10 was one of the early movers in serving local markets, and despite the difficult credit environment, is fully-funded to expand its data center network. The company now has 12 data centers in nine markets: Cincinnati, Oh.; Atlanta, Ga.; Raleigh and Charlotte, N.C.; Tampa and Jacksonville, Fla.; Nashville, Tenn.; Louisville, Ky.; and Richmond, Va.