Nearly a dozen data center companies have gone public, filed for an initial public offering, or been reported to be exploring one over the past year, with the pace accelerating over the past three months.
The shift follows a stretch when the sector had all but abandoned public exchanges. Blackstone’s $10 billion acquisition of QTS in 2021 opened a run of take-private deals that pulled CyrusOne, CoreSite and Switch off public markets in the months that followed. By 2022, the number of listed data center firms had fallen to two.
Recent IPOs include Blackstone Digital Infrastructure Trust, Brookfield-backed colocation provider Csquare, and Fermi. Switch and Singapore-based DayOne have confidentially filed, SoftBank-backed SB Energy has filed publicly, and artificial intelligence data center specialist Nscale is reportedly preparing a listing. Vantage Data Centers, CyrusOne, Blue Owl, DataBank and EdgeCore are all reported to be at least exploring offerings.
That Switch and CyrusOne, both taken private during the earlier wave, are weighing returns points to a shift in how the industry funds itself. Data center firms are pursuing an increasingly diverse mix of funding sources and public equity strategies.
“There’s not one blanket answer” as to why firms are turning back to public markets, said David Guarino, head of global data center and tower research at Green Street. “The capital requirements to build data centers are getting so large that everyone’s getting creative to find new ways to attract capital. All of them have a different reason to go public.”
The 2021 retreat had followed a change in the dominant business model. The sector had been built on multitenant colocation, but growth shifted toward large-scale campuses developed for cloud providers such as Amazon Web Services, Microsoft and Google. That trend intensified with the surge in AI demand.
Such campuses require years of investment before generating revenue and deliver “lumpy” returns as they lease up in single transactions, a pattern not conducive to the quarter-by-quarter performance public investors expect. Private capital proved a better fit for that rapid development.
The current pipeline spans established operators such as Vantage and CyrusOne alongside companies like Fermi and SB Energy that hold few, if any, operating assets. It ranges from retail colocation providers to public REITs launched by Blackstone and Blue Owl Capital.
“As the size of the companies and the cash needed to develop new sites has grown exponentially over the last few years, the creativity required is different. There’s no one-size-fits-all rules here,” said Jeffrey Moerdler, who chairs the data center and digital infrastructure practice at Haynes Boone. “A public offering, whether it’s for a small portion, a large portion or all of a company’s value, offers a lot of opportunities.”