European investment firm BC Partners is currently leading among companies bidding on the CenturyLink data center portfolio the Monroe, Louisiana-based telco has been shopping around since last year, Reuters reported, citing anonymous sources.
CenturyLink hopes to get more than $2.5 billion for the portfolio of properties it started building with the acquisition of data center provider Savvis in 2011, also for $2.5 billion. The company has substantially grown the portfolio since the acquisition by both expanding in existing locations and adding new ones.
The news comes almost one week after a report that another major US telco, Verizon Communications, is nearing a deal to sell its data center portfolio, the bulk of which it also gained through an acquisition of a data center provider in 2011. Equinix is reportedly the most likely buyer of Verizon’s $3.5 billion portfolio of data centers, consisting primarily of facilities gained in the telco’s $1.4 billion acquisition of Terremark.
Earlier this week, a report surfaced that another data center provider, albeit a much smaller one, may soon change hands as well. Silver Lake Partners, the private equity firm that owns Santa Clara, California-based Vantage Data Centers, has reportedly hired Royal Bank of Canada and DH capital to explore the possibility of offloading Vantage through an auction.
A private equity consortium, comprising of GTCR, Charlesbank Capital Partners, Berkshire Partners, and Stonepeak Infrastructure Partners, which was pursuing the CenturyLink assets earlier, broke apart, according to Reuters.
Sources told the news wire service that CenturyLink’s attempt to divest the data centers has been complicated by the fact that it leases many of its facilities from Digital Realty Trust, a San Francisco-based REIT and one of the world’s largest data center providers. CenturyLink is the REIT’s second-biggest tenant by annualized rent, leasing about 2.3 million square feet across 51 locations, according to Digital’s second-quarter 2016 investor presentation.
Last year, AT&T changed its mind about selling its multi-billion-dollar data center portfolio for the same reason, according to Reuters. AT&T is Digital’s fifth-largest tenant, leasing space in 44 locations.
BC specializes in buyouts, focusing on large businesses primarily in Europe and “selectively” in North America. The company has done 91 acquisitions since its inception in 1986 and is currently advising funds totaling more than €12 billion.
BC did not respond to a request for comment in time for publication. A CenturyLink spokesperson sent us a statement saying:
As we stated in our second-quarter earnings call in early August, our strategic review process continues to progress well and we expect to complete the process by the end of this year. We are exploring a full range of options including, but not limited to, a partnership or joint venture, a sale of all or a portion of the data centers, as well as keeping these assets as part of CenturyLink’s portfolio. During this process, we remain focused on operating our data centers to provide our customers with the high-quality service and support they deserve.