Jennifer Fritzsche, a leading investment analyst in Telecom, Media and Technology, offers up her unique insight and thought about the rapidly evolving world of digital infrastructure, investment and policy..
February 23, 2021
The SPAC is back! That is the headline that has tapped into MAJOR talk time on CNBC of late! It seems like every day there is a CEO of a new SPAC on there trying to talk up his / her new vehicle and why it should be a focus for investors. But according to Data Center Frontier, the SPAC-attack is getting closer to our universe. Specifically, there are two new SPACs where seasoned and tenured data center executives joined the C-Suite.
Specifically, members of the former management team at CyrusOne will be joining the team at InterPrivate Acquisition Partners. This SPAC is expected to focus on digital infrastructure. Former CONE CEO (Gary Wojtaszek) has signed on as an advisor. Additionally, Michael Tobin (from TelecityGroup fame) is reportedly working with an Amsterdam SPAC called Crystal Peak also focused on the data center space. Recall, under Tobin, TeleCity did numerous acquisitions (originally build from the ground up of three companies – TeleCity Limited, Redbus Interhouse Limited and Globix Holdings (UK) Limited) and became one of the largest independent data center operators in Europe before being purchased by Equinix in 2016.
While we agree that the non-stop SPAC train could be indicative of some of the “irrational exuberance” that Mr. Greenspan so famously spoke about in 1996, both Wojtaszek and Tobin have a reputation for strong strategic vision and they predicted forward looking trends very well. Remember CONE ‘bear hugged’ the hyperscalers well ahead of many of their data center competitors. And TelecityGroup was one of the early pioneers in the now extremely active European data center market (which we still estimate is two-three years behind the US and likely will be the region with the most data center growth over the coming year). As a result, while the SPAC party is indeed a crowded one, the brain power coming with these two should not be overlooked.
Listening to the great (and very wise) Colby Synesael during his presentation at the Virtual Metro Connect show Monday (2/22) morning, it seems like there is much to wood to chop in the data center M&A space to keep these SPACs busy. For data centers specifically, even though the space has already seen a wave of intense M&A, there are still many targets out there. These include (but are not limited to): Data Foundry, Telefonica LatAm Data Centers, Aptum Canada, TIM Data Centers, KIO Networks, INAP, Global Switch, Digiplex Nordic Data Centers. To have the knowledge and operating experiences of these teams may give a SPAC a leg up vs. some of the PE, Sovereign Wealth, Pension and Infra Funds who have a lot (a LOT) of capital but not a lot of experience navigating this complex and ever-changing space.