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Europe’s Digital Infrastructure Deployments in 2024: The Role of Private Equity and AI [Feature Article]

As we look ahead to 2024, in another special JSA Europe roundtable, industry experts agreed that several key trends are expected to shape Europe’s digital infrastructure deployments. These trends include the growing demand for AI, the rise of greenfield and brownfield developments, the role of private equity-backed platforms, and the influence of real estate and M&A activities. JSA Media Consultant João Marques Lima offers a closer look.

AI, or artificial intelligence, is indeed one of the most significant buzzwords in the industry today. Its potential to revolutionize various sectors, including digital infrastructure, is widely acknowledged. While there is still much speculation about the exact impact of AI on digital infrastructure, it is clear that the demand for AI-related data centers and infrastructure will increase.

Private Equity’s Role in Financing Digital Infrastructure

The financing requirements for digital infrastructure projects, particularly data centers, are substantial. Private equity funds, alongside banks, play a crucial role in providing the necessary capital for these projects.

The digital infrastructure market is experiencing hypergrowth, with data center construction booming. For example, in the US alone, the number of new data centers being built has skyrocketed from under 500 megawatts in 2020 to anywhere between 3,500 to 5,000 megawatts under construction currently. Private equity funds specializing in digital infrastructure have emerged to meet the financing needs of this hypergrowth.

The financing requirements for data centers are staggering, with an estimated $50 billion needed to support the construction of 5,000 megawatts of data centre capacity on average. Private equity, alongside banks, is essential in providing the necessary funds. However, even with significant leverage, the financing challenge remains substantial, requiring innovative approaches and partnerships.

Financing Models for Developments

Within the European data centre arena, several financing models have made it possible to build a robust digital infrastructure ecosystem. With the advent of AI, these are set to only grow in line with pent up market demand. 

This includes for example, greenfield and brownfield developments which refer to the construction of new data centers and the repurposing of existing facilities, respectively. These developments play a crucial role in expanding Europe’s digital infrastructure. With the increasing demand for data centers, both greenfield and brownfield projects offer opportunities for growth and innovation.

Private equity-backed platforms have also become significant players in the digital infrastructure space. With the financing requirements for data centre developments reaching staggering amounts, private equity funds have taken on a crucial role in providing the necessary capital. Funds specializing in digital infrastructure have emerged, partnering with banks to finance the wave of new projects.

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