Private investment firm Starwood Capital has invested in data center developer Echelon.
Starwood this week announced that a controlled affiliate had invested $850 million in the Irish firm.
The transaction will see Starwood Capital invest through Starwood Opportunity Fund XII and Starwood Real Estate Income Trust Inc, becoming a 50 percent shareholder in Echelon and “providing material capital” for its further growth.
Starwood said the investment values Echelon at approximately €2.5 billion ($2.69bn).
Lorcain Egan, co-head for Europe at Starwood Capital Group, said his company was "delighted" to announce this investment.
Egan said: "It is a testament to the business the Echelon team has built since 2016 to establish a leading European data center platform. Echelon has been delivering critical infrastructure to support the growth of some of the world’s most dynamic technology companies and we look forward to continuing to partner with them in that mission.
"For Starwood Capital, this significant and strategic investment continues our long-term focus and capital deployment into a core sector for our European business.”
Founded in 2016 and launched in 2019, Echelon Data Centres now has six sites across Ireland and the UK with a total potential capacity of up to 500MW.
Its sites in Ireland – DUB10 and DUB40 in Dublin’s Clondalkin and Grange Castle and DUB20 and DUB30 in County Wicklow’s Arklow – will have a combined capacity of around 400MW.
In the UK, it is developing the LCY10 site in London’s Docklands. A second campus is planned in Chesham, Buckinghamshire.
The company previously partnered with Starwood for its 30MW LCY20 facility in Buckinghamshire. The $250 million, two-story facility will reportedly consist of six data halls totaling around 9,000 sqm (97,000 sq ft).
In 2022 Echelon raised $960 million in debt from Starwood to fund its Irish roll-out.
Niall Molloy, CEO and founder of Echelon Data Centres, described Starwood Capital as a "long standing partner" of his company.
He said: Starwood Capital’s scale, access to capital, and track record position Echelon incredibly well to service our customers’ growth requirements on global basis. We look forward to the continued growth of the business and expansion into new European markets and beyond.”
Starwood Capital Group is a private investment firm founded in 1991 with a focus on global real estate. The company has around $115 billion in assets under management. The company launched its first dedicated data center fund earlier this year.
Starwood is also reportedly planning a large data center campus in Herndon, Virginia, on the site of the former Commanders NFL team (formerly the Washington Redskins).
Last year, Starwood sold a Digital Realty-leased data center to GI Partners. Starwood is also said to be behind a proposed 30MW data center development in Alexandria, Virginia, that was blocked by county officials.
Deutsche Bank acted as lead financial advisor and Morgan Stanley acted as financial advisor for Starwood Capital, while Kirkland & Ellis and Arthur Cox acted as legal counsel. Eastdil Secured acted as lead financial advisor and Nomura acted as financial advisor for Echelon Data Centres, and William Fry acted as legal counsel. Morgan Stanley and UOB acted as Mandated Lead Arrangers on the financing. Allen & Overy, Arthur Cox and A&L Goodbody acted for Echelon Data Centres on the financing and due diligence.
