Canadian operator eStruxture Data Centers has been acquired by investment firm Fengate Asset Management.
The companies this week announced the completion of a CA$1.8 billion (US1.3bn) transaction, which they said is the largest ever deal in Canada’s data center sector.
The deal sees Fengate “significantly increase” its equity stake in eStruxture. Though specifics weren’t shared, reports suggest the company will hold more than two-thirds of the operator, after buying the equity held by Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ).
“For years, Fengate has had a front-row seat to the meteoric success of eStruxture, and that intimate perspective gives us full confidence to continue our relationship through this next exciting growth phase,” said Lou Serafini Jr., Fengate president and CEO .
Fengate is investing on behalf of Fengate Infrastructure Fund III, Fengate Infrastructure Fund IV, and their affiliated entities, including an investment by Liuna Pension Fund of Central and Eastern Canada.
The investment also includes newly-raised capital from a group of institutional secondary investors co-led by private markets firm Partners Group and private markets and secondary investor Pantheon.
Jonathan Wener and the Wener Family Office, along with eStruxture founder and CEO Todd Coleman, will also reinvest a “significant portion” of their holdings in eStruxture.
The companies said the cash injection will enable the expansion of eStruxture’s portfolio of 15 facilities to meet the demand for data center capacity.
CEO Coleman said: “This partnership with Fengate marks a transformative moment for eStruxture. It not only reflects our shared commitment to advancing Canada’s digital landscape but also positions us to lead in delivering highly scalable and sustainable digital infrastructure solutions that will empower businesses across Canada and beyond.”
The company was launched in 2017 with capital from CDPQ. It claims to be the only Canadian-owned and operated data center platform, operating 15 data centers across Toronto, Calgary, Montreal, and Vancouver with a total footprint of 760,000 sq ft (~70,600 sqm) and 130MW of power.
Founded in 2006, Fengate is an alternative investment manager focused on infrastructure, private equity, and real estate strategies, with $8 billion of capital commitments under management. Fengate Real Asset Investments first put capital in eStruxture in 2017.
A spokesperson for the Caisse told the WSJ the pension fund is “very satisfied” with the return on its eStruxture investment. “Our exit is part of a regular portfolio rebalancing exercise — and the company is well positioned for its next phase of growth.”
DH Capital, a division of Citizens and Scotiabank, served as eStruxture’s financial advisors; Davies Ward Phillips & Vineberg as legal advisor; and KPMG as tax advisor. Kirkland & Ellis and Stikeman Elliot served as Fengate’s legal advisors; Campbell Lutyens as placement agent; and Leo Berwick as tax advisor.
