Blackstone to launch publicly traded firm to acquire data centers
What's the story
Blackstone Inc., one of the world's largest alternative investment firms, is launching a publicly traded acquisition company. The new entity will focus on acquiring data centers, giving individual investors an opportunity to invest in the artificial intelligence (AI) boom. Blackstone is currently approaching sovereign wealth funds and other institutions for initial funding, with plans to raise tens of billions from a wider investor base later on, according to Bloomberg.
Investment approach
Aligning with Blackstone's major strategies
The new publicly traded company aligns with two of Blackstone's major strategies: aiming to become the world's largest investor in AI infrastructure and expanding its reach to individual investors. The firm plans to invest in existing leased data centers, rather than speculative raw land or development projects. This move is set against a backdrop of concerns over the sustainability of the data center building boom and its potential impact on individual investors.
Market competition
Competing with established REITs
The new entity will compete with established data center real estate investment trusts (REITs) such as Digital Realty Trust Inc. and Equinix Inc. These companies have seen their shares rise due to the increasing demand for power, properties, and hardware needed for complex computing processes. Blackstone has been a major player in the data center infrastructure boom, which is expected to require up to $3 trillion of investment by 2030.
Growth potential
CEO's insights on AI investment and economic growth
During a recent analyst call, Blackstone CEO Steve Schwarzman emphasized that the "historic pace of investment" to develop AI is the "key driver of economic growth today." He also highlighted an enormous need for capital solutions in this sector. However, as data centers grow larger, only a small number of investors can buy these properties, raising questions about exit strategies for backers.
Market standard
Vision for the new company and potential conflicts
Blackstone executives envision their new company as a broad barometer of the value of data centers. They believe such a benchmark would help determine fair market prices for these facilities and speed up deal-making across the industry. Despite some investor concerns about potential conflicts with other funds, Blackstone has no plans to use this new entity to buy data centers from its portfolio companies.