As the Montreal region has emerged as a fast-growing market for hyperscale data centers, the boom has been almost entirely a local affair, creating growth for Quebec providers like COLO-D, ROOT Data Center and eStruxture.
That changed this week with the entrance of the first major U.S.-based player. Vantage Data Centers announced Tuesday that will enter the Quebec market by acquiring 4Degrees Colocation and its two data centers from owner Videotron Ltd. for $200 million ($259 million Canadian).
4Degrees operates data centers in Montreal and Quebec City, which are both certified for Tier III Design and Construction and offer 16 megawatts of capacity. Vantage, which is based in Santa Clara, Calif., will immediately begin expansion projects in both markets to bring total capacity up to 31 megawatts. In the meantime, the purchase of an existing provider provides quick entry into a growth market.
“Based on extensive dialog with our customers, Vantage identified Montreal and Quebec City as highly attractive markets due to low power costs, tax incentives and excellent fiber connectivity,” said Sureel Choksi, President and CEO of Vantage Data Centers. “The 4Degrees acquisition will accelerate our expansion into these markets, enabling Vantage to better serve hyperscale, cloud and enterprise customers across five strategic geographies.”
First International Expansion
The deal marks the first international expansion for Vantage Data Centers, which launched in 2010 by redeveloping an Intel data center campus in Santa Clara. The company has been the most prolific developer in the market over the past eight years, creating 75 megawatts of mission-critical space. It also operates a data center campus in Quincy, Washington. It is currently building a $1 billion data center campus in Northern Virginia, where it plans to build more than 1 million square feet of data center space in Ashburn’s “Data Center Alley.”
In early 2017, Digital Bridge Holdings acquired Vantage to serve as a platform for a larger expansion into the wholesale data center industry. Vantage had hinted at an imminent transaction earlier this month when it sold $225 million in securitized notes, citing the need for “additional dry powder to finance our growth in existing and new markets.”
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.
One motivation for cloud providers is compliance with data residency regulations, as having a physical facility in Canada is critical to winning government IT business. The Canadian government has released a cloud adoption plan which restricts storage of sensitive data to facilities located within Canada.
Hydro, and Plenty of It
Toronto is Canada’s financial capital, and home to the largest concentration of enterprise IT business. But hyperscale players have focused on Montreal, largely due to abundant hydro power from local utility Hydro Quebec, which is available at far cheaper prices than options in Toronto. 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.
The acquisition expand Vantage’s North American footprint to five markets. Maxime Guévin, currently the general manager of 4Degrees Colocation, will become vice president and general manager of Vantage Canada.
Free Resource from Data Center Frontier White Paper Library
The Cloud is Better at the Edge
This white paper explains how edge computing helps to solve many of the challenges associated with using the cloud for your digital transformation strategy.Get this PDF emailed to you.
“The 4Degrees team is incredibly excited to join Vantage in providing superior data center facilities across North America,” said Guévin. “This deal will marry Vantage’s expertise in the hyperscale business with our extensive knowledge of the rapidly growing Canadian market.”
Videotron acquired Québec City-based 4Degrees Colocation in 2015. As part of Videotron, 4Degrees expanded its Québec City center and extended its operations to Montréal, where it built its second state-of-the-art data centre.
Data Center Frontier is edited by Rich Miller, the data center industry’s most experienced journalist. For more than 20 years, Rich has profiled the key role played by data centers in the Internet revolution.