In a record data centre deal, investment manager Fengate Infrastructure Fund IV and affiliates announced a $1.8 billion partnership with eStruxture Data Centres.

Speaking with BNN Bloomberg on Wednesday, Todd Coleman, the founder, president and CEO of eStruxture, explained Artificial Intelligence (AI) is likely to continue to affect the data centre industry.

“The AI boom is most likely going to revolutionize the data centre industry, the asset class as a whole, but I think it’s important to note that boom hasn’t even hit Canada as of today. Today we’re in preparation for it, we’re investing ahead of the curve. Frankly, we plan to see that positive impact, on our business [begin] sometime in the next 12 to 16 months,” Coleman said adding that the impact will be significant. 

“Part of this transaction and investment is to give us financial [power] to invest ahead of the curve, but we think that this could quadruple plus our business over the next three-to-five years.”

eStruxture, which is a leading data centre platform that also rents out space to store company servers and equipment and has over 150 employees. It is based in Canada with 15 data centres in locations such as Montreal, Toronto, Calgary and Vancouver, which serve nearly 1,000 customers.

The growth of AI has had a considerable impact on the data centre industry, as Sam Sahn, managing partner and portfolio manager at Hazlewood Investments, told BNN Bloomberg in April.

He said that companies converting to cloud technologies, and the growing interest in AI, have spurred demand.

In addition, a November 2023 report from Hazleview Investments indicated that the U.S. data centre market was valued at US$263 billion in 2022, with the possibility to grow to $602 billion by the end of 2030.

The investment, Coleman said, was to prioritize expanding capital funds in order to meet a growing demand for data centre capacity. Fengate – whose over 230 employees invest in assets and businesses on behalf of its 50-plus clients and has a total asset value of over $35 billion – first gave the company seed capital in 2017.

“Our first priority when we did this transaction when we were raising the money, was to bring in new expansion capital and that’s what Fengate brought to the table, and that is earmarked largely for what we describe as green-filled investments,” he said. “So investing in new data centres across Canada.”

Read more: Portfolio manager sees AI, tech spurring data centre demand

In addition to Fengate, its affiliates Fengate Infrastructure Fund III, IV and LiUNA pension fund of Eastern Canada contributed to the deal.

“Our friends at Fengate have been investors with us for a long time, they’ve been around for nearly almost all of the eight years that you mentioned, and so this was just obvious for them, as we were looking around and realizing we needed to raise more capital. The obvious place to look was internal.”

In a news release on the deal, resident and CEO of Fengate, Lou Serafini Jr, said he is excited about the company’s next steps.

“For years, Fengate has had a front-row seat to the meteoric success of eStruxture, and that intimate perspective gives us full confidence to continue our relationship through this next exciting growth phase.”

“This strategic investment will accelerate eStruxture’s hyper-scale growth, providing a launch pad for transformative expansion and solidifying its leadership in Canada’s digital infrastructure market,” the release said. 

To watch the full interview, click on the video at the top of this article