Digital Realty to acquire Brazil’s Ascenty for $1.8bn

24 September 2018 | Natalie Bannerman

Cover

Digital Realty has announced that its Brazilian subsidiary, Stellar Participações, has entered into a definitive agreement to acquire Ascenty, a leading data centre provider in Brazil, from private equity firm Great Hill Partners for $1.8 billion.

"We are pleased to expand our global footprint into Latin America and to partner with the Ascenty management team and Brookfield, said Bill Stein, CEO, Digital Realty. “We expect this acquisition will further accelerate our growth while enhancing our ability to support our customers' digital transformation across the globe. This transformative transaction represents consistent execution against the new market strategy we articulated at our Investor Day last December, and immediately establishes us as a market leader within an historically under-served region poised for rapid growth.”

In addition, Digital Realty has also entered into a separate equity commitment letter with Brookfield Infrastructure, an affiliate of Brookfield Asset Management, under which Brookfield has committed to fund half of the required initial equity investment of approximately $613 million in exchange for 49% of the total equity of Ascenty.

“We are also gratified to partner with Brookfield on this transaction, leveraging their extensive experience as a regional investor and operator.  This acquisition advances our strategy of sourcing strategic and complementary assets to strengthen and diversify Digital Realty's data centre portfolio and expand our product mix and global footprint," added Stein.

The deal offers a number of benefits to Digital Realty and helps to strengthen its position in the region. These include:

  • The addition of a high-quality Latin American portfolio. Ascenty has eight ‘state-of-the-art’ data centres located in the key Brazilian metro areas of São Paulo, Campinas, Rio de Janeiro and Fortaleza.
  • A significant embedded growth pipeline. Latin America offers a unique opportunity for future data centre growth, driven by positive macro and demographic factors, including growth in the working age population and increased digitisation.
  • A proprietary fibre network. Ascenty offers a diverse connectivity solutions to its data centre clients through a proprietary, 4,500km fibre optic network connecting Brazil's primary technology, finance, and population hubs of São Paulo, Campinas, Rio de Janeiro and Fortaleza.
  • An experienced management team that will remain in place and will oversee te day-to-day operations for the region. 
  • Potential regional cost efficiencies and financial benefits. The two companies have identified significant cost efficiencies, with respect to the establishment of a regional operating platform in Latin America, supply chain management, and financing costs.

We're delighted to join Digital Realty's global platform and partner with Brookfield to provide our customers access to one of the largest networks of interconnected data centres in the world, said Chris Torto, CEO, Ascenty. “Our combined platform will be uniquely positioned to provide our customers the full spectrum of data centre solutions along with the ability to support their growth on a global basis, and we look forward to working with the Digital Realty and Brookfield teams to extend our state-of-the-art data centre and connectivity solutions to capitalise on the rapidly growing demand within the region."

The transaction is expected to close Q4 of 2018 and is subject to standard closing conditions. Digital Realty's agreement with Brookfield is subject to certain closing conditions but is also expected to close in the fourth quarter of 2018.