Mubadala and BlackRock Launch $30B Global Data Centre Platform

Mubadala Investment Company and BlackRock have launched a $30 billion global data centre platform, capitalised with $7 billion of initial equity and a debt facility of $9 billion arranged through a club of major banks and private credit lenders. The platform, which will operate under a yet-unnamed brand jointly controlled by the two LPs, has identified an initial portfolio of nine hyperscaler colocation campuses across the US, Europe, and Asia, of which two have already been agreed for acquisition.

The joint venture is a response to the growing demand for data centre capacity, driven by the increasing power requirements of hyperscalers. The hyperscaler power demand trajectory has created a structural shortage of high-quality colocation real estate, making it an attractive opportunity for investors. This shortage is expected to persist, driven by the continued growth of cloud computing, artificial intelligence, and other data-intensive technologies.

The platform is targeting a 12% net IRR over a 15-year fund life, with a meaningful share of cash flow underwritten by 15- to 20-year leases to investment-grade hyperscaler counterparties. This investment strategy is designed to provide a stable source of income, while also offering the potential for long-term capital appreciation. The partnership's focus on hyperscaler colocation campuses is also expected to provide a degree of protection against market volatility, as these assets are typically characterized by high occupancy rates and limited vacancy risk.

The $7 billion initial equity commitment represents the largest single allocation Mubadala has ever made to a co-investment partnership outside of its long-standing Apollo joint venture. This investment underscores Mubadala's commitment to investing in strategic sectors, including technology and real estate. For BlackRock, the partnership marks a significant expansion of its real assets platform, which has been actively investing in data centres and other digital infrastructure assets in recent years.

The platform's debt facility of $9 billion has been arranged through a club of major banks and private credit lenders, providing the partnership with the necessary financing to pursue its acquisition strategy. The use of debt financing will also serve to enhance the platform's returns, by allowing it to leverage its equity investments and increase its purchasing power. The partnership's ability to secure a large debt facility at attractive terms is a testament to the strength of its investment strategy and the quality of its assets.

The launch of the Mubadala and BlackRock data centre platform is also significant in terms of its implications for the broader data centre market. The platform's $30 billion investment target is one of the largest ever announced in the sector, and is likely to have a major impact on the market for hyperscaler colocation campuses. The partnership's focus on high-quality assets and its commitment to investing in strategic locations is also expected to drive up prices for these assets, making it more challenging for other investors to acquire them.

The platform's investment strategy is also expected to have a positive impact on the development of the data centre sector, by providing much-needed capital for the construction of new facilities and the expansion of existing ones. This investment will help to support the growth of the digital economy, by providing the necessary infrastructure for hyperscalers and other data-intensive businesses to operate and expand. As the demand for data centre capacity continues to grow, the Mubadala and BlackRock platform is well-positioned to capitalize on this trend, and to generate strong returns for its investors.

The partnership between Mubadala and BlackRock is also a strong example of the trend towards co-investment partnerships between sovereign wealth funds and private equity firms. These partnerships allow investors to pool their resources and expertise, and to invest in large and complex assets that might be difficult to acquire on their own. The Mubadala and BlackRock partnership is a prime example of this trend, and is likely to be followed by other investors in the future.

In terms of the mechanics of the platform, the partnership will be jointly controlled by Mubadala and BlackRock, with both parties having an equal say in the investment decisions. The platform will be managed by a team of experienced investment professionals, who will be responsible for identifying and acquiring assets, as well as managing the day-to-day operations of the platform. The partnership will also have a strong focus on environmental, social and governance (ESG) considerations, with a commitment to investing in sustainable and responsible manner.

Overall, the launch of the Mubadala and BlackRock data centre platform is a significant development in the data centre sector, and is likely to have a major impact on the market for hyperscaler colocation campuses. The platform's $30 billion investment target, its focus on high-quality assets, and its commitment to investing in strategic locations make it a major player in the sector, and a strong example of the trend towards co-investment partnerships between sovereign wealth funds and private equity firms. As the demand for data centre capacity continues to grow, the Mubadala and BlackRock platform is well-positioned to capitalize on this trend, and to generate strong returns for its investors.