GI Closes Data Infrastructure Fund

GI Partners has held a final closing of its inaugural Data Infrastructure Fund LP, with $1.8 billion in capital. The new fund was oversubscribed and beat its target of $1.25 billion.

Investors in the Data Infrastructure Fund (DIF) include sovereign wealth funds, pensions, financial institutions, investment management firms, foundations, and family offices.

“We are grateful for the strong support of our investors, both our existing limited partners and the many new investors to GI Partners,” said Philip Yau, a managing director of GI Partners. “We welcome the opportunity to be both a capital and thought partner in the data infrastructure space to our investors as well as our portfolio companies.”

GI Partners engaged Park Hill Group as its placement agent for the DIF and Kirkland & Ellis provided legal services.

The DIF invests across four data infrastructure subsectors – data centers, data transport, wireless access, and tech-enabled infrastructure, primarily in North America. The fund made its first investment in January 2020 when it invested in DR Fortress, an operator of data centers in Hawaii. In June 2020, the fund acquired Blue Stream Fiber, a provider of high-speed broadband in Florida.

The new fund is led by Managing Director Steve Smith, who was previously CEO of data center operator Equinix, and Managing Director Mark Prybutok, who led the telecom infrastructure investing strategy of Alinda Capital for nearly ten years.

“A core thesis of our fund is to invest in elements of infrastructure closer to the end-user that will support both existing needs, as well as the next generation of critical applications utilizing 5G technology, private networks, the Internet of Things, machine learning, and other innovations,” said Mr. Prybutok.

“Technology and communications are the largest and fastest-growing drivers of the global economy and the infrastructure that supports these sectors is critical to the operation of every business, government, and household in the developed world,” said Mr. Smith. “The disruption we have all experienced in 2020 due to the global pandemic has only served to underline the importance of data infrastructure to everyone’s life.”

San Francisco-based GI Partners makes control equity investments in companies with enterprise values of $250 million to $1 billion that are active in the IT infrastructure, healthcare, software, and services sectors. The firm also invests in real estate. In November 2017, the firm held a final closing of GI Partners Fund V LP at an oversubscribed and hard cap of $2.8 billion.

In 2004, GI Partners created Digital Realty to consolidate a portfolio of 21 stand-alone data center assets. The company went public in 2004 and is today the world’s largest provider of wholesale colocation and data center services with more than 130 global locations.

“Since founding Digital Realty in 2001, GI Partners has always believed in the fundamentals that drive the digital economy, which is now essential to our daily lives,” said Rick Magnuson, the founder and executive managing director of GI Partners. “We are delighted to have a dedicated fund and experienced team led by Mark and Steve, which will build on and strengthen our long-standing position in the data infrastructure space.”

In March 2019, Blackstone acquired a minority stake in GI Partners through its Strategic Capital Holdings Fund which specializes in acquiring stakes in alternative asset managers.

Private Equity Professional | September 9, 2020

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