Just two years ago, the Montreal data center market was primarily a local affair, dominated by homegrown providers. That changed as hyperscale customers arrived to take advantage of Quebec’s ample supply of cheap hydro power. Since December 2018, U.S. based data center developers have been buying up providers in Quebec, making it one of the hottest markets for both cloud growth and data center M&A.
That trend was kicked off by Vantage Data Centers, a specialist in providing wholesale data center space for hyperscale customers, which entered the Quebec in late 2018 market by acquiring 4Degrees Colocation for $200 million ($259 million Canadian).
Vantage is now back for more. On Friday the company said it has acquired the hyperscale data center business from Hypertec in Montreal. The transaction expands Vantage’s total footprint in the Province of Quebec to 81 megawatts (MWs) of IT capacity across three campuses.
Hypertec’s 49 megawatt campus includes 25 MWs across two existing facilities and 24MW of expansion capacity. The Hypertec campus is less than two miles from Vantage’s existing 11 megawatt campus in Montreal, sits on 10 acres and will consist of 320,000 square feet once fully developed. Vantage will immediately begin construction of a third facility to complete the campus.
Equity Investment Supports Expansion
The acquisition closely follows last week’s injection of $1.25 billion in equity funding from Vantage’s current investors, led by Digital Colony/Colony Capital. The investment allows Vantage to continue its rapid expansion, which has accelerated in 2020 with a series of acquisitions in Europe and new construction in North America.
The Montreal data center market‘s sustainable energy profile has made it a magnet for hyperscale operators. Hydro Quebec has invested heavily in building hydro-electric dams and generation, which supply 95 percent of the province’s power, with wind and other renewables providing the remaining 5 percent. Large cloud computing providers love cheap green power, and several have made Montreal the focal point for their infrastructure expansion in Canada. Both Google and Amazon Web Services have opened cloud regions in Montreal in recent years.
“The acquisition of Hypertec enables Vantage to continue capitalizing on Montreal’s hyperscale growth given its access to scalable renewable energy, attractive power costs, tax incentives and robust fiber connectivity,” said Sureel Choksi, president and CEO, Vantage Data Centers. “Since entering the Canadian market in early 2019, Vantage has invested heavily in the region. We have been very impressed by the Hypertec data center team and are excited to welcome them to Vantage.”
“Vantage continues making significant investments in the Province of Quebec, and the Hypertec acquisition further cements our position as a leading hyperscale provider in Canada,” explained Maxime Guévin, vice president and general manager for Vantage Canada. “This increased capacity positions us to better serve our local and international customers, and we expect Montreal to benefit from the addition of more high-quality jobs and revenue coming into the region.”
“This deal also provides our data center business unit the opportunity to grow and scale more quickly as part of Vantage’s global platform,” said Jonathan Ahdoot, Hypertec’s chief commercial officer. “This transaction is an important strategic move for Hypertec as we look to further focus our resources and capital on propelling our fast growing core technology product and services businesses forward, as well as on growing new verticals.”
The transaction was funded with equity commitments from Digital Colony and other existing Vantage investors, as well as acquisition debt financing. Terms of the deal are not being disclosed.