Afleveringen
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Infranity's ambitions to become a global player in the infrastructure debt market have advanced with the establishment of a US office. Cool Vector caught up with two Infranity partners to learn about the sustainable lending opportunity in North America, the risk-reward profile of co-location data centers and the limits of the energy transition.
Infranity, based in Paris, launched seven years ago in partnership with Italian insurer and asset manager Generali. The firm has a mandate to lend to the expanding infrastructure market in a way that supports sutainability goals, says Sacha Kamp, Investment Managing Director and Head of Investment Debt. Infranity's backers want to see their capital "creating positive change."
Paul Colatrella, Managing Director and Head of North American Debt, explains that while the focus on sustainability is more pronounced among European investors, his recent meetings with North American investors reveal a "material segment in the US and Canada" that integrate sustainability goals into overall investment objectives.
In the interview, Colatrella and Kamp also discuss the firm's digital infrastructure deal flow, led by co-location data center opportunities, fiber, and small-cell investments. The firm is seeing good opportunities in tier two and tier three markets in North America. Infranity is focused on co-location opportunities in part because these assets have more diversified customer bases, and their more complex business models require more careful due diligence. Infranity looks to invest between $100 million and $200 million per transaction.
While not every emerging low-carbon power technology has led to a viable business model, Colatrella and Kamp say the rising demand for power is producing lending opportunities across the energy transition landscape. "The massive scale of not just building the data centers but the energy need behind them is I think something that might shock really shock a lot of Americans," notes Colatrella. "We're talking about replacing and expanding a very large percentage of our electrical gridif we're going to achieve the AI targets and the quantum computing targets."
Watch the episode on YouTube: https://youtu.be/o3m9WcoetVM
Visit the Cool Vector Media website: https://coolvectormedia.com/
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A shortage of construction workers with skills specific to data centers is hindering the growth of digital infrastructure, says Amazon Web Service's former Worldwide Head of Engineering, Construction and Real Estate.
In a wide-ranging Cool Vector interview, Sandra Benson, now Vice President of Industry Transformation at Procore Technologies, says of the global race to construct data centers: ââWe literally can't build fast enough. The biggest reason we can't is we don't have the labor to build fast enough. And even if we had the bodies, there's also skill developmentâ necessary.
The proliferation of data center projects around the world has contributed to the demand for skilled labor, which has led to a rise in compensation. âYou can go to a trade school, come out and the kind of salary in general that you can command now versus even five or 10 years ago is exponentially different,â says Benson.
In her Cool Vector interview, Benson discusses her professional background as a woman in a male-dominated industry, as well as the public relations issue faced by construction. ââI think itâs a great industry, but we have a perception problem,â says Benson. âI've said this for almost 30 years. People think of construction as very backwards, right? That itâs not very digital. And that is absolutely not true.â
Benson also shares insights into skills necessary for success in data center construction, including installation skills as well as contracting projects with full commissioning, meaning the mandate to make the many components of a data center site work together, although these may be overseen by different contractors.
Benson also discusses the challenge of integrating sustainability goals into data center construction projects in the midst of a labor shortage, as well as the sense of excitement among construction executives for their growing backlogs of projects.
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Zijn er afleveringen die ontbreken?
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In his 35 years in the power business, â EnCap Investmentâ 's James Hughes has never seen a market as "strange" as the current one, driven by data center inelastic demand as well as industrial projects across the US.
Hughes is a Managing Partner and head of the EnCap's energy transition business, which last May raised a $1.5 billion fund to invest in power, low-carbon fuels and carbon management. In a wide-ranging interview with Cool Vector, Hughes says hyperscaler demand for data centers has created an attractive supply-demand dynamic for his strategy. "I've never seen a large class of customer, a large set of demand, that is price inelastic," he says.
Hughes predicts a five- to seven-year window during which he is confident "we will be able to take capital and earn a return that is a premium return on that capital."
Hughes shares his analysis of the the "Republican trifecta" in Washington and its likely impact on his strategy. While the removal of incentives for low-carbon fuels and carbon management companies may challenge those business models, Hughes says any changes to the Biden-administration Inflation Reduction Act will have little impact EnCap's opportunities in power generation.
"If I can execute a power project, there is somebody that's going to buy that power under a long term fixed price agreement," says Hughes. "The challenge is not identifying a customer for the power. The challenge is, okay, can I find a site and get control of that site? Can I gain access to the grid?"
Formed in 1988, EnCap is one of the largest energy-focused private equity firms in the world. Hughes says his team has the experience to recognize opportunities in a rapidly changing market. "What we bring to the table is gray hair, and having done this for a very long time and having lived through several cycles," he says.
Hughes shares is views on the prospects for renewable energy in digital infrastructure, noting the huge interest in using "clean, green" power, offset by an urgency to get projects built using whatever energy sources are available, led by oil and gas.
He gives his take on an oft-repeated question in today's digital infrastructure and energy market: Are we in a bubble? Hughes predicts efficiencies in the next generation of GPUs, but says he doesn't see any trend that will reverse excess power demand in the coming years.
Watch Cool Vector on Spotify: â https://open.spotify.com/show/4nsZ5LKkE5sBSb04tAf94P?si=f047c3d6b664458e â
Visit the Cool Vector website: â https://coolvectormedia.com
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The NEW Episode of Cool Vector delves into the sudden rise of DeepSeek, NVIDIAâs share swoon, the implications of overbuilding in the data center space, Stargateâs shock-and-awe, $500 billion digital infra announcement, tough sledding in the private capital markets, and why Phil, Nabeel and David enjoy the topic of data centers so much.
In âCool Vector Hot Takes,â Phillip Koblence, Nabeel Mahmood, and David Snow engage in a lively, irreverent conversation, drawing on decades of experience in the data center and private capital industries.
Regarding DeepSeekâs more-with-less breakthrough, Koblence says, ââMy initial take was, wow, that was quick. The overarching demand that's been generated in the super, mega, hyperscale data center space has been a little overhyped. You might not need 100 or 300 KW in a single rack in order to achieve some of these things.â
Mahmood adds: âWeâve been talking about it for a long time. People have been talking about the overdesign in the data center and compute space, and the underutilization.â
Despite evidence of potential overbuilding in the data center space, Mahmood and Koblence agree all that compute will eventually be utilized. Demand may increase even quicker, says Mahmood, referencing the Javons Paradox, by which technology made faster, cheaper and easier prompts a surge in usage.
The three discussed Stargateâs impressive consortium of backers, including SoftBank, Oracle and Microsoft, and their decision to highlight the dollar amount of the digital infrastructure mega-project over other metrics.
The talk turns to dynamics in the private capital market, which, Snow explains, is suffering from a dearth of cash distributions, restricting, for now, the amount of capital raised earmarked for digital infrastructure.
Finally, the three editorial advisors to Cool Vector discuss what they find so intellectually fascinating about the data center industry.
Cool Vector Website: coolvectormedia.com
Nomad Futurist Website: https://nomadfuturist.org/
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Ardian's very first investment in a data center company shows it is "quite convinced on the AI opportunity in Europe," says Pauline Thomson, Head of Data Science and a Managing Director at the $176 billion investment firm â Ardianâ .
In a Cool Vector interview, Thomson describers the thesis behind Ardian's $1.2 billion investment in Verne, an Iceland-based, green data center company with pan-Nordic growth plans. She notes that Iceland is the "only country in the world powered by 100% renewable energy." Verne's other operations in the UK and Finland are similarly focused on renewable power, as is an additional property under development in Norway. Thomson expects low-carbon nuclear energy to eventually play a big role in the Nordic data center platform.
Thomson explains that being a scaled provider of low-carbon, "sustainable compute" will give Verne an edge as a data center provider. "You need a lot of capital, because these are capital-hungry assets," she says. "And you need to scale the platforms to have sufficient importance on the market. If you want to attract customers that have a big demand for increased capacity, you need to show to them that you have a pipeline of projects, that you will be able to support them in their own growth. Otherwise you cannot become a partner of choice for these clients."
Although the firm is a major investor in infrastructure around the world, Ardian had not previously invested in a data center platform, because until Verne they could not find a company that was a good fit for Ardian's thesis. The firm is attracted to data centers because of their critical importance to society, low correlation to GDP, revenue visibility, as well as the need to deploy capital in order to have a successful commercial strategy.
Thomson says her firm expects the European data center market to grow by 27% CAGR over the next six years.
Ardian has named former Digital Realty CEO William Stein as Non-Executive Chairman of Verne.
Thomson explains Ardian's boots-on-the-ground edge in securing powered land across Europe, as well as in securing highly sought-after components necessary for data center development, prominently transformers.
Verne data centers will specialize in high-performance computing (HPU), requiring a specific configuration of racks and cooling technology. Ardian anticipates that as "agentic AI" gains wider use, such as with autonomous vehicles, data center architecture may need to be reconfigured yet again to take on the added compute.
As head of data science, Paris-based Thomson explains how her team has helped portfolio companies leverage their own data to capture greater efficiencies, including the creation of a resource called AirCarbon, helping airports analyze carbon emissions.
"Our relationship to compute has fundamentally changed," says Thomson. "There is compute everywhere in whatever we do. That's not going away."
Access Cool Vector on Spotify: â https://open.spotify.com/show/4nsZ5LKkE5sBSb04tAf94P?si=f047c3d6b664458e â
Visit the Cool Vector website: â https://coolvectormedia.com
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The data center industry is uniquely positioned to integrate workers from a broad array of backgrounds, which is good news, given the rapid aging of the industry's original workforce.
According to three veterans of the industry, more needs to be done to elevate awareness of careers in data centers among workers in other industries, as well as among young people raised in a digital world, but unaware of the physical infrastructure necessary to keep the data flowing.
This wide-ranging Cool Vector conversation includes Phill Lawson-Shanks of â Aligned Data Centersâ , Nabeel Mahmood of â Mahmoodâ , and Phillip Koblence of Critical Ventures. All three are helping build a non-profit foundation called â Nomad Futuristâ , dedicated to demystifying the data center industry.
Mahmood, CEO and co-founder of Nomad Futurist, begins the conversation with an overview of how much more digital the world will become, and the necessity of infrastructure to service this enormously expanded coverage. At the same time, the humans charged with building and managing the infrastructure are leaving the industry. Mahmood estimates that within five years, "there's going to be a retirement party. . . every day of the week."
The demand for workers will not be confined within the walls of data centers themselves. Lawson-Shanks, an advisor to Nomad Futurist, anticipates a proliferation of new businesses around data centers globally, similar to the innovation acceleration that accompanied the advent of the iPhone. "We're at an iPhone moment again," he says. "No one anticipated the ecosystem that would develop around that piece of technology."
There is "an amazing tsumani [of technology] that's coming," Lawson-Shanks says.
Koblence, the other co-founder of Nomad Futurist, details the many types of career paths available within broader digital infrastructure. Koblence stresses the industry needs workers of every background. "People think you need to be a computer geek in order to work in a data center digital infrastructure, and that's simply not the case," he says. "If anything, the majority of the roles are non-computer focused roles, and more involved in the development and deployment of these sites that need to be everywhere."
Koblence adds: "The people that are most successful in our industry tend to be the ones that have come from other industries, that have the ability to articulate and communicate in a way that is not necessarily second nature to someone who has a computer-focused or engineering-focused mindset."
Lawson-Shanks notes his company, Aligned Data Centers, has had success recruiting workers from the US Navy nuclear submarine program, because these veterans are used to "having that methodology of procedures and policies. You don't just do things - there are checks and balances before every change."
Koblence and Mahmood describe their visits to high schools, sometimes with tech executives from well known companies like Netflix and TikTok in tow, to help teenagers understand digital infrastructure. They say these native-digital young people are very engaged, smart, have access to a universe of information, and are concerned about environmental impact.
The three veterans also agree that more needs to be done to educate communities about the positive impacts of data centers beyond direct and indirect job creation, including tax revenue.
Visit the Nomad Futurist website: https://nomadfuturist.org/
Visit the Cool Vector website: https://coolvectormedia.com/
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David Capobianco's company, â LandBridgeâ , owns 270,000 surface acres in West Texas, and he's pleased to explain why the land's profitability has tripled in three years. The reason has to do with data centers.
LandBridge is a publicly traded affiliate of Five Point Energy, of which Capobianco is CEO. The company's share price is being carefully watched by investors looking for evidence of a new paradigm in land ownership. Acreage once used primarily for ranching or energy extraction in the Permian Basin is now seen as ideal for data centers.
n an wide-ranging interview with Cool Vector, Capobianco details the attractive features of his "powered land" in the Delaware sub-basin, spanning West Texas and New Mexico: it sits on top of the lowest-cost natural gas in North America, it has plentiful produced and brackish water for cooling, it is proximate to good fiber connectivity and carbon sequestration resources, and it is governed by an exceptionally friendly Texas regulatory regime.
What's more, the Delaware land is far away from any population center, removing community apprehension as a barrier to development.
LandBridge's surface acreage is "open for business," says Capobianco, meaning any potential digital infrastructure partner can expect rapid support in the development of data centers, including proprietary water infrastructure developed by LandBridge, which processes some 4 million barrels of water daily across the Permian. Cooling capabilities have become more and more critical as new technology, such as Nvidia's Blackwell chips, runs hotter and hotter.
Capobianco describes the opportunity for renewable energy in the Permian as important but not sufficient on its own. Because hperscalers are locked in an "existential" battle for data center development, the more consistent energy provided by bountiful West Texas natural gas is in high demand. He says the only renewable energy capable of fully powering a data center is nuclear.
He also details the business plan of LandBridge, which makes money from land leases as well as power margins and some mineral rights. Capobianco predicts well-suited land in the Permian and elsewhere will "re-rate" now that investors recognize a net new source of revenue in the form of digital infrastructure.
Says Capobianco: "The need is great, the race is on."
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Visit the Cool Vector website: â https://coolvectormedia.com/â
Watch clips from the episode by following Cool Vector on LinkedIn: â https://www.linkedin.com/company/cool-vector-media/posts/?feedView=allâ and YouTube: â https://www.youtube.com/@CoolVector
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Private equity firm â Actisâ is building data centers around the world while maintaining strict standards around sustainable energy, water and social impact. And the firm's impact is about to get bigger. Actis and General Atlantic recently merged to create an $87 billion investment platform, with Actis focused on the huge opportunity in sustainable infrastructure, largely in growth markets across Asia, Latin America, Africa and Eastern Europe.
Digital infrastructure is a significant part of the investment mandate for Actis, with 17 offices across the world. The firm draws on its on-the-ground expertise in real estate, renewable energy and infrastructure to tackle the many burgeoning opportunities in data centers, wireless towers and fiber.
In a wide-ranging interview, Thomas Liu and James Magor, Partner and Director, respectively, describe a global build-out of data centers in global growth markets, most of which have not previously offered data center sites to hyperscaler customers. Each market has a very different regulatory regime, but most favor data sovereignty, and are led by governments aware of the developmental benefits that digital infrastructure can bring to their economies.
Driving the development are expansion-minded hyperscaler customers like Amazon and Microsoft, which are locked in a competition for AI dominance around the world. Liu notes these hyperscalers need local partners with insights into local regulations, and the ability to maintain relationships of trust with local communities. For example, Actis has taken a successful digital literacy program from its operations in Nigeria and started using it to engage with communities across Asia.
Liu and Magor discuss Actis' recent investment in Epoch Digital, a diversified data center platform with developments planned in South Korea, Malaysia and Taiwan. Magor says the importance of resilient building techniques was highlighted by a recent Taiwanese typhoon that hit Epoch's construction site there.
Liu explains the benefits of merging with General Atlantic, including an expanded investor base and the ability for Actis to draw on General Atlantic's deep relationships with TMT customers across the world.
Visit the Cool Vector website here: â https://coolvectormedia.com/
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Data center real estate investment trusts (REITs), like Equinix and Digital Realty Trust, differ from traditional REITs in their higher operational intensity and reliance on artificial-intelligence tailwinds for growth, says Harold Chen, Director of Commercial Real Estate at Fitch Ratings.
Chen, whose team has assigned investment-grade ratings to Equinix and Digital Realty, says the companies benefit from surging demand related to AI. Of the two, Digital Realty has a higher concentration of hyperscaler customers, defined as big-tech, data-center customers like Microsoft, Mega and Amazon. The upside of hyperscaler concentration is longer-term leases, while the downside is customer concentration and the inability to more frequently reprice rent rates, says Chen, adding data center REITs have a history of only single-digit customer churn. Data centers that cater to co-location customers tend to have shorter leases, he says.
Data-center REITs also differ from traditional REITs in their "significantly higher levels of operational intensity," says Chen. Complexities like power, cooling and interconnectivity make data-center REITs "significantly different beasts."
Chen also discusses with Cool Vector the impact that ESG and sustainability initiatives have on Fitch ratings, and the historic challenge for data center companies to access certain forms of financing, like asset backed securities (ABS).
Visit the Cool Vector website: Cool Vector Media
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"I kid you not. . . at least once a week, I've got a conversation going with somebody who sits in digital infrastructure private equity, and they say to me, 'If you know somebody, or a team, that does XYZ in the data center space, let me know. I'd love to meet them, because that is the type of business model that we could put hundreds of millions, if not not billions, into.'"
The amount of private capital available for deployment in digital infrastructure investments is far outpacing the supply of operational talent necessary to put it to work. Patrick Reyes, a Principal at infrastructure-focused executive search firm, â One Search,â says large private equity and infrastructure firms eager to enter the digital infrastructure asset class often have deeply researched ideas about where to invest, but lack the platform company or management team to executive the strategy.
Reyes shares these observations in the Cool Vector episode, "Why Comp is Surging for Digital Infrastructure Investors and Operators."
Cool Vector website: â https://coolvectormedia.com/â
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Partners Group was already bullish on AI when, in 2022, the firm invested $1.2 billion in EdgeCore Digital Infrastructure. Then the debut of ChatGPT a few weeks later blew to lid off their initial assumptions of growth.
In the post-ChatGPT world, the hyperscaler market served by EdgeCore saw an "explosion of demand for capacity," says Diffendal who, in a wide-ranging interview, explains the criticality of strong management in responding to the unexpectedly strong leasing activity.
Two years later, the growth of EdgeCore Digital Infrastructure was such that "we basically ran out of money," says Diffendal. In September, Partners Group raised another $1.9 billion in capital, much of it in the form of co-investment from limited partners, institutional investors who had many questions about power availability and exit opportunities.
Diffendal also discusses the imperative of keeping the data centers powered to a "five-nines" (99.999%) standard of up-time, to avoid getting financially penalized by "demanding" hyperscaler customers. As investors in data-center hub Northern Virginia, Diffendal describes the general shortage of all forms of labor there, including electricians.
Partners Group's original thesis was that data centers would benefit from the tailwinds of cloud computing, video and AI. Diffendal adds: "I really think we're just at the very beginning of understanding what the commercial implications of AI will be."
Visit the Cool Vector video-podcast website: https://coolvectormedia.com/
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A conversation with Omar Jaffrey, founder of digital infrastructure private capital firm â Palistar Capitalâ , which is currently investing from a $1.9 billion fund.
Jaffrey gives a grand tour through the digital infrastructure investment opportunity, in which he says builders of scale will have advantages in winning customers. He cautions that some investors confuse the full stack of technology, services and human capital involved in the telecommunications industry with core infrastructure, the later of which has a history of more consistent performance.
Among other topics, Jaffrey also makes the case for the long-term durability of infrastructure hard assets, comments on the pressures faced by potential sellers of wireless rooftop and tower assets, and explains the many options for revenue streams that owners of many towers can realize.
Cool Vector website: https://coolvectormedia.com/
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John Siegel, a Partner at private equity firm Columbia Capital, offers a deep dive into the physical assets necessary to power an AI-driven internet, including the fiber optic cables that connect the growing population of data centers around the world, and the nations jockeying for position to build digital infrastructure hubs.
In a wide-ranging conversation, John shares his views on the demand drivers of information sharing, including not only AI but the massive proliferation of devices that connect to the internet. He details the data center build-out across Asia and explains why governments are so eager to develop hubs like his home base in Northern Virginia.
A long-time telecom investor and "qualified bull," John also shares his analysis of a wave of bankruptcies in the early 2000s (which lost billions for private equity investors) and what lessons these might have for the current digital infrastructure build-out.
About Cool Vector
Cool Vector is a video-podcast created to chart the rise of data centers and the digital infrastructure asset class. On a regular basis, the podcast will convene expert conversations about the investment opportunities and macro themes driving the build-out of digital infrastructure, including private capital dynamics, performance expectations, energy demand, geopolitical influences, sustainability opportunities, development and construction, technology and community impact.
Cool Vector is hosted by financial journalist David Snow, a long-time chronicler of the alternative investment market. This interview should not be considered investment advice or a solicitation to invest, and the views and opinions expressed herein are those of the speakers and do not necessarily reflect the views or positions of any entities they represent.
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Watch this interview on the Cool Vector YouTube channel: YouTube
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Digital infrastructure has a voracious appetite for energy, but the electric utility industry is filled with apprehension and lacks 'muscle memory' to 'build big things,' according to Brian Janous, co-founder of sustainable energy specialist Cloverleaf Infrastructure, as well as the former head of data center energy for Microsoft.
In a wide-ranging interview with Cool Vector, Janous describes how his mandate at Microsoft went from relative obscurity to a top-order concern among the company's leadership. He discusses how data center sites are identified, evaluated and the importance of finding a willing counter-party in the local utility.
Janous also discusses the importance of community engagement, the risks of project delays and regulatory lags, the dominace of solar as a form of renewable energy for data centers, and the criticality of long-term power purchase agreements.
About Cool Vector
Cool Vector is a video-podcast created to chart the rise of data centers and the digital infrastructure asset class. On a regular basis, the podcast convenes expert conversations about the investment opportunities and macro themes driving the build-out of digital infrastructure, including private capital dynamics, performance expectations, energy demand, geopolitical influences, sustainability opportunities, development and construction, technology and community impact.
Cool Vector is hosted by financial journalist David Snow, a long-time chronicler of the alternative investment market.
Watch Full Episodes of Cool Vector on YouTube and Spotify.
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Financial journalist David Snow introduces Cool Vector, a new video-podcast that will chart the rise of data centers and the digital infrastructure asset class.
On a regular basis, Cool Vector will convene expert conversations about the role that institutional investment capital will play in the build-out of digital infrastructure around the world, and focus on the overlapping long-term trends of digitalization, the rise of private capital, changing energy demand, changing land and real estate use, innovation in sustainability, national security, and many other topics.
Full video episodes of Cool Vector will live on the Cool Vector YouTube channel as well as the major podcasting platforms like Spotify. Clips of each episode will be promoted on LinkedIn, Instagram and TikTok.
The Cool Vector video-podcast homepage is here: https://coolvectormedia.com/
