Digital Colony raises $4.1 billion for second fund focusing on digital infrastructure

Infrastructure fund is seeking to raise $6bn for data center and tower shopping spree

Bnamericanas

DataCenter Dynamics Published: February 10, 2021

Colony Capital’s digital infrastructure investment arm, Digital Colony, has raised $4.1 billion for its second fund.

In a memo sent to investors seen by Bloomberg News, Colony CEO Marc Ganzi said that the fund is targeting $6bn.

DataBank’s bank banks on data

Digital Colony’s new fund will focus on three investment segments, with one seeking to acquire Asia Pacific towers. Among the investors was the Teacher Retirement System of Texas, Employees Retirement System of Texas, Virginia Retirement System, the Orange County Employees Retirement System, and Kuwait’s investment arm Wafra.

Colony Capital was founded by Thomas Barrack with a focus on buying distressed real estate during economic downturns.

But the Covid crisis proved too big of a downturn for Colony, as its commercial real estate investments in malls and hotels plummeted in value, bringing shares in the company down with it as it was forced to restructure debt.

Luckily for the company, it had already begun to pivot to ‘digital infrastructure’ – that is, data centers, fiber optic cables, cell towers, and everything in between.

Its Digital Colony subsidiary, led by Marc Ganzi, spent 2019 and 2020 aggressively buying up a number of data center assets. Ganzi previously ran the similarly-tech-focused Digital Bridge, which was acquired by Colony in 2019.

Digital Bridge owned data center company DataBank, funding a flurry of acquisitions – among them Indianapolis-based LightBound, PNC Bank’s data center in Pittsburgh, two data centers from 365 Data Centers, another from Stream Data Centers, and all of C7 Data Centers.

Colony took over DataBank with its Digital Bridge acquisition and engineered its biggest acquisition yet. Digital Colony teamed up with EQT Partners to acquire Zayo for $8.2bn in cash, and then sold off the company’s zColo data center business to its own DataBank subsidiary.

Earlier this month, the deal fully closed, bringing DataBank from 20 data centers to 45.

Digital Colony has also taken a major stake in Vantage Data Centers, and acquired several Brazilian data centers to form Scala.

Ganzi, meanwhile, has also seen his value rise. He was set to take over Colony Capital eventually, but the pandemic accelerated the company’s shift to digital infrastructure and his shift to the top spot. He replaced Barrack in July 2020.