I Squared Capital Weighs Sale of $2 Billion Asian Data Center Firm BDx Amid AI Boom

NEW YORK – Global investment firm I Squared Capital is reportedly exploring strategic options, including a potential sale, for its significant Asian data center business, BDx. Sources familiar with the matter indicate that the firm is evaluating the future of BDx, a company valued at approximately $2 billion, signaling a potential major transaction within the rapidly expanding data center industry.

The move by I Squared Capital to consider divesting BDx underscores the intense investor interest in data center assets, particularly those positioned to capitalize on the surging demand driven by artificial intelligence (AI) and cloud computing. The AI boom has created an insatiable appetite for computing power and, consequently, for the physical infrastructure that houses it – the data centers.

BDx, formerly known as Big Data Exchange, operates a substantial network of data centers across Asia, with a significant presence in key markets. The company has been actively expanding its footprint and capabilities, aiming to meet the growing needs of hyperscale cloud providers and enterprise clients in the region. Its portfolio includes facilities in strategic locations, designed to offer high levels of connectivity, power, and security.

According to Bloomberg Law, which first reported on the potential sale, I Squared Capital has engaged advisors to explore the company's options. While a sale is not guaranteed, the fact that it is being considered highlights the attractive valuations currently being seen for data center infrastructure. The firm acquired BDx in 2017, and its investment has coincided with a period of robust growth and consolidation in the global data center market.

The data center sector has become a highly sought-after asset class for private equity firms and institutional investors. The ongoing digital transformation, the proliferation of mobile devices, the rise of the Internet of Things (IoT), and, most recently, the transformative power of generative AI, are all contributing to an unprecedented demand for data storage and processing capabilities.

This potential deal for BDx is emblematic of broader trends observed in the real estate and technology infrastructure sectors. For instance, in a separate development, TA Realty recently announced the sale of two hyperscale data center buildings totaling 745,000 square feet and 165 megawatts of IT load capacity in Leesburg, Virginia, as reported by Business Insider. This transaction, involving facilities developed for a single hyperscale tenant, exemplifies the monetization of stabilized assets in prime markets like Northern Virginia, a region often referred to as the "Silicon Valley of the East" for its concentration of data centers.

“This sale is a significant milestone for TA Realty and TADG,” commented Allison O’Rourke, Partner at TA Realty, regarding their Virginia transaction. “It reflects our strategy of developing build-to-suit facilities for hyperscale customers in Tier 1 U.S. markets and monetizing assets upon stabilization. Northern Virginia is the premier global data center market, and the completion and sale of these initial buildings demonstrates the strength of our development and execution capabilities.”

The competitive landscape for data centers means that companies with established operations in high-growth regions like Asia are particularly attractive. BDx's existing infrastructure, customer base, and development pipeline could make it a prime acquisition target for other infrastructure investors, strategic players looking to expand their Asian presence, or even larger data center REITs. The valuation of $2 billion suggests a significant undertaking, likely attracting interest from major players in the global investment community.

As AI continues to evolve and permeate various industries, the demand for advanced data center solutions, including those offering high-density computing capabilities and low latency, is expected to grow exponentially. Companies that can provide scalable, reliable, and efficient data center services are well-positioned to benefit. I Squared Capital’s consideration of a sale for BDx could be an opportunity for the firm to realize substantial returns on its investment while allowing BDx to potentially join forces with a larger entity better equipped to meet the future demands of the AI-driven digital economy.

The Financial Post and other outlets have also covered the news, highlighting the strategic implications of such a divestment in the current market environment. While I Squared Capital has not officially commented on the matter, the reports suggest that the firm is actively engaged in discussions, aiming to identify the best path forward for its significant investment in the Asian data center market.