As Vantage Data Centers builds its growing data center network, the company is once again going to the markets to raise capital for expansion.
Vantage said this week that is has lined up $692 million in funding, and will use the money to refinance its existing debt and build additional capacity. The company is a wholesale data center specialist that now operates in six markets, including U.S. campuses in Santa Clara, Northern Virginia, Phoenix and Quincy, Washington as well as operations in Montreal and Quebec City in Canada.
Vantage raised $548 million in new securitized notes, which have received an investment grade “A-” rating from Standard & Poor’s. The company also arranged $144 million in debt financing from a consortium of banks, which the company will use for data center construction projects.
The money allows Vantage to refinance existing debt, significantly reducing interest expense in the process. The transactions also provide Vantage with $385 million of additional liquidity to fuel the development of data centers.
The deals reinforce the growing sophistication of the data center industry, as large investors are creating platforms to build digital infrastructure at the lowest cost possible. Digital Bridge, which acquired Vantage in 2017, has been a pioneer in wielding equity in its existing facilities to procure cheaper capital.
“Vantage continues to pioneer not only best-in-class data center infrastructure but also industry-leading capital formation and deployment strategies that together enable the company to meet the demands of our hyperscale customers,” said Sharif Metwalli, Vantage’s CFO.
Last year Vantage became the first data center company to use securitization financing, in which a company creates a security based on the creditworthiness of a specific pool of assets, rather than the entire company. This strategy Vantage was able to issue debt notes backed by cash flow from their operational data centers, which are leased by some of the world’s largest and most credit-worthy companies.
Vantage has now raised more than $1.8 billion in three rounds of securitized debt transactions. The company now has 11 data centers totaling 106 megawatts of capacity, and is building five more facilities that will add another 89 megawatts.
The company has been the most prolific developer in the Silicon Valley data center market over the past eight years, creating nearly 75 megawatts of mission-critical space. It also operates a data center campus in Quincy, Washington, and has just opened 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 December, Vantage moved into international markets by acquiring Canadian provider 4Degrees Colocation, providing a data center footprint in the power-rich market in Quebec, where it is already adding capacity with several new construction projects. In January, the company unveiled plans to build a 1 million square foot data center in Goodyear, Arizona to serve the fast-growing Phoenix market.
The flurry of activity represents the realization of a vision that took shape with Vantage’s 2017 acquisition by Digital Bridge, which has positioned Vantage as a platform to expand into new markets beyond its home base in Silicon Valley.