Blackstone signs $7bn JV in booming data centre sector

Sports focus as Arctos takes PSG stake.

We’re looking at two of the big themes we’ve seen this year. First up, Blackstone has announced a joint venture that aims to build four hyperscale data centre campuses in Europe and the US for around $7 billion.

Digital infrastructure is one of Blackstone’s “highest conviction investment themes”, said president and COO Jon Gray, pointing to the boom in cloud adoption and generative AI.

The second big theme of the day is sports and leisure. We cover Arctos Partners’ minority investment in football giant Paris Saint-Germain and look back at our deep dive earlier this week into Raine Group’s backing of sportswear and retailer Castore and Trive Capital Partners’ take-private play for a UK 10-pin bowling company. Sports will also be one of the topics at NEXUS 2024 – more on that below.

Finishing up, we have updates on the take-privates of edutainment company Kahoot and mail and logistics business DX Group.

Big data

Blackstone has agreed a joint venture with Digital Realty to develop four hyperscale data centre campuses in Frankfurt, Paris and Northern Virginia for a total estimated development cost of around $7 billion.

The private equity firm will acquire an 80 percent stake for approximately $700 million of initial capital contributions, while Austin, Texas-headquartered Digital Realty will take the rest.

The campuses are planned to support the construction of 10 data centres with approximately 500 MW of potential IT load capacity.

“Data centres are experiencing once-in-a-generation demand growth, driven by cloud adoption and the AI revolution,” said Jon Gray, president and COO of Blackstone, in a statement. “Digital infrastructure is one of our highest conviction investment themes as a firm, and this transaction with a trusted data centre operator in Digital Realty is another example of how we are investing behind this trend.”

Gray is one of the speakers at NEXUS 2024, hosted by PE Hub Europe and Private Equity International next year. More on that below.

And now the sports…

As it’s coming up to the weekend and I haven’t had the chance to write a Friday Dealflow in a while, we’re going to look at some of our sports and leisure coverage this week.

Before we dive into that, I want to mention that you’ll be able to find out more about the boom in private equity investing in sports at NEXUS 2024, co-hosted by PE Hub Europe and Private Equity International, in Orlando on March 6-8.

Day one includes a panel titled ‘A new Frontier in the Major Leagues – Sports investing on peak’. And it won’t just be sports theory at NEXUS 2024 – there will also be a charity cup golf tournament and a pickleball tournament for those who want to put their skills to the test.

You can check out the full agenda here, which has been created in conjunction with PEI Group’s editors, ILPA and our LP advisory board. It features topics front of mind for CIOs from CalSTRS, Massachusetts Pension Reserves Investment Management, Maryland State Retirement and Pension System, New Mexico State Investment Council and more.

Keynote speakers include Howard Marks, co-founder and co-chairman of Oaktree Capital Management, Jonathan Gray, president and COO of Blackstone, and David M Rubenstein, co-founder and co-chairman of Carlyle Group.

Expansion

Arctos Partners has signed a deal with Qatar Sports Investments to take a stake in French football club Paris Saint-Germain. Arctos is buying up to 12.5 percent of the club in a deal that values PSG at more than €4bn, PE Hub Europe understands.

PSG will use the investment to grow its operations and support its real estate activities, including its stadium and its training centre in the Paris suburbs. PSG will also look to expand into new markets, including North America.

Arctos is no stranger to sports investments. The Dallas-headquartered private equity firm has invested in teams in its home country’s Major League Baseball, National Basketball Association and Major League Soccer, as well as in European football. It also agreed a minority stake in Formula One team Aston Martin Aramco Cognizant in November.

Since QSI acquired PSG in 2011 it has dominated its domestic French league, winning a record 11th title last year, but has failed to win silverware in Europe. It has had some big wins off the pitch, however. It came fifth in Deloitte’s 2023 Money League with €654 million of total revenue, having rarely even made the list before QSI’s takeover.

Looking for promotion

I spoke to Raine Group partner Jason Schretter earlier in the week about his firm’s investment in sportswear and digital retailer Castore.

Raine, via its growth equity fund Raine Partners, led a £145 million ($184 million; €168 million) funding round in Castore in November.

The money, along with New York-based Raine’s experience in sports business, will help Castore compete with the big three of Nike, Adidas and Puma in winning contracts with elite teams, said Schretter.

“They would love to continue to grow into bigger and bigger teams,” he added. “As you go up the pyramid it gets more and more competitive. That’s part of what our fundraise is meant for – to have the financial firepower to compete for some of those top-tier teams. Some will be difficult to move, so there’s a gap they need to bridge.”

Bowled over

Keeping with the take-private theme, US private equity firm Trive Capital Partners agreed a £287 million ($362 million; €335 million) cash acquisition with the board of Ten Entertainment Group, a 10-pin bowling company that runs 52 sites across the UK.

The offer of 412.5p per share gives a premium of 46.3 percent over the last six months’ average and 49.7 percent over the last 12 months.

Fair game

A take-private offer for Norwegian game-based learning company Kahoot is “fair from a financial point of view” for shareholders, according to investment bank DNB Markets.

Goldman Sachs Asset Management, with co-investors General Atlantic, KIRKBI Invest, Glitrafjord and others, made a NKr35 per share offer – valuing the total equity at NKr17.2 billion ($1.72 billion; €1.53 billion) – in July, which the Kahoot board recommended.

Norwegian securities rules required the Kahoot board to make a statement on the offer, but supervisory authority Oslo Børs decided that should come from an independent expert, in this case DNB Markets.

PricewaterhouseCoopers, one of the ‘Big Four’ accountancy companies, shared a similar view in August.

Approval

HIG Capital has merger clearance control from the Irish authorities for its £290 million take-private of mail and logistics company DX Group, which operates in the UK and Ireland.

The private equity firm has also secured just shy of half of the outstanding shares and CFDs in DX, when taking into account irrevocable undertakings and letters of intent.