London: BlackRock Inc plans to pour as much as £500mil or about US$678mil into an overlooked corner of Britain’s data centre market, a commitment it unveiled as chief executive officer Larry Fink prepares to join US President Donald Trump on his state visit to the country.
The asset manager has acquired a site in west London that will seed a new venture with data centre operator Gravity Edge, according to a statement.
The so-called Digital Gravity Partners venture will seek to buy existing data centres with underutilised capacity, BlackRock’s global co-head of real estate Thomas Mueller-Borja said in an interview.
The world’s biggest investors are piling into data centres, betting that the rapid growth and adoption of artificial intelligence (AI) will lead to a corresponding boom in demand for the infrastructure required to power it.
That’s prompted several of the world’s biggest alternative asset managers to aggressively pursue vast new facilities as they bid to satisfy demand from so-called hyper scalers like Amazon.com Inc’s AWS, Microsoft Corp and Alphabet Inc’s Google.
But electricity costs in Britain are among the highest in Europe, while the country’s power grid is struggling to keep pace with demand.
“We are trying to find existing assets that are underutilised but have power,” Mueller-Borja said. “We aren’t doing ground up development for hyper scalers.”
The initial investment of more than £100mil is being made from BlackRock’s 1.2bil or about US$1.4bil Europe Property Fund VI that the asset manager completed raising in July.
Investing in smaller facilities servicing enterprise customers will also increase the audience of potential buyers BlackRock will be able to sell the upgraded properties to, in contrast to the vast developments targeting hyper scalers that entail billions of capital expenditure.
“We are always really focused on exit liquidity,” said Paul Tebbit, BlackRock’s other co-head of real estate. “One of the attractive things about this strategy given the lot sizes we are creating, we can see real estate funds or infrastructure funds being the end buyer.” — Bloomberg
