Mergers and acquisition activity in the data center sector generated more than $12.3 billion in deal values globally in 2011, according to an analysis by the UK consulting firm BroadGroup. The most active market for deals was the United States, followed by the UK and Australia.
The year's headlines featured huge transactions like CenturyLink's $2.5 billion acquisition of merger and with Savvis, the deal in which KKR, Silver Lake and Technology Crossover Ventures bought hosting and domain provider Go Daddy for $2 billion, and Verizon's purchase of Terremark for $1.4 billion. But those mega-deals eclipsed a larger volume of smaller transactions, according to Broad Group, which said 45% of all M&A deals were below $100 million, with a further 25% valued up to $250 million.
$6 Billion in Financing
The survey also found that a further $6 billion had been raised in private funding rounds and IPOs in the data center sector in 2011. Broad Group said almost half of all transactions were in the $100m to $700m bracket, and almost half used debt financing instruments. J.P. Morgan Chase Bank/J.P. Morgan Asset Management led with the highest number of deal arrangements in the sector, followed by RBC Capital Markets and Barclays Capital in second place, while Morgan Stanley and Seaport Capital were in joint fourth position.
Digital Realty had the largest single funding event of the year, raising $1.5 billion in a Global Senior Unsecured Revolving Credit Facility in November, followed by Global Switch with a bond issue of €600 million in April 2011.
"We believe that when we add these figures to the additional investment that has been made in extending, upgrading and constructing datacentres the financial scale of the sector has shifted substantially in 2011," said BroadGroup. "These figures still discount the investments and acquisitions occurring in software, technology, and energy innovation to address the datacentre sector. The overall market is generating a significant level of cash and stakeholder value and it will be interesting to watch developments in the coming year."
BroadGroup recently launched a monthly newsletter, Finance and Investment for DataCentres, and will be hosting DataCenters 2012 on May 23-24 in Nice, France.