Cool Deal: Thompson Street and Cequel III Exit DDC Solutions in Sale to Daikin Applied

Thompson Street Capital Partners (TSCP) has closed the sale of DDC Solutions, a provider of GPU-focused data center cooling systems and software, to Daikin Applied, a subsidiary of Japan-headquartered Daikin Industries.

DDC Solutions designs and manufactures data center infrastructure products focused on high-density cooling for graphics processing unit (GPU) clusters, which are widely used in artificial intelligence (AI) and machine learning environments.

The company’s products include the DDC Rear-Door Heat Exchanger, which uses water to cool server racks; the DDC Air-Assisted Liquid Cooling platform, which combines air and liquid cooling for better performance; and thermal management software that helps operators control power and airflow without changing their data center setup. Customers of DDC include hyperscale data center operators, AI infrastructure providers, and enterprise IT departments that manage high-performance computing environments.

San Diego-headquartered DDC was founded in 2018 by Chris Orlando and Mark Ortenzi and today is led by CEO Keith Markley. TSCP and Cequel III, a St. Louis-based private investment firm, invested in DDC Solutions in January 2024.

“In partnering with DDC, we saw a compelling opportunity to help shape a leading platform in the fast-growing AI infrastructure market,” said Jim Cooper, the founder and chairman of TSCP. “The company’s impressive growth and technological advancement are a testament to its exceptional leadership team. With Daikin’s global reach and commitment to innovation, DDC is well-positioned to continue delivering mission-critical GPU cooling solutions to customers around the world.”

Minneapolis-based Daikin Applied designs, manufactures, and sells commercial and industrial HVAC systems, including chillers, air handlers, rooftop units, and control systems. The company is a subsidiary of Japan-based Daikin Industries (TSE: 6367.T), which operates in more than 150 countries, with regional operations in Asia, North America, Europe, and the Middle East.

“DDC’s progress over the past 18 months has been remarkable,” said Tom St. Geme, a director at TSCP. “In a short period of time, the company has delivered GPU cooling at scale for top-tier AI customers, launched innovative new products, expanded capacity, and built a high-performing commercial team. Daikin is an outstanding strategic partner to support DDC’s next phase of growth, and we’re excited for what lies ahead.”

Thompson Street Capital Partners is a St. Louis-based firm that makes equity investments of $50 million to $250 million in companies with EBITDA between $5 million and $50 million. Sectors of interest include healthcare and life science services, software and technology services, business and consumer products and services. Founded in 2000, the firm has acquired over 150 companies and has assets under management of over $4.8 billion.

Cequel III is a St. Louis-based investment firm and family office that was founded in 2002 by Jerry Kent, the chairman and CEO of TierPoint, and Howard Wood. The firm invests from $5 million to $50 million in North America-based companies that have EBITDA from $2 million to $10 million. Sectors of interest include business services, information technology, telecommunications, media, software as a service, real estate, and healthcare.

Lincoln International was the financial advisor to TSCP and Cequel III on this transaction.

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