Asset AllocationJuly 29, 2024

CDPQ Finances $75M in Second Investment in Quebec Data Center Provider Vantage

Institutional investors are fueling momentum in data centers, which continue to grow in 2024, according to CBRE research.

Reported by Michael Katz

Canadian pension fund Caisse de dépôt et placement du Québec is investing C$103 million ($75 million) in senior financing to support the expansion of data center management firm Vantage Data Centers’ Quebec City campus.

According to the C$434 billion pension fund, the investment will help fund the construction of a third building on the data center campus, which will add an additional 16 megawatts of computing capacity “to meet the growing demand for cloud services in Québec and Eastern Canada.” According to CDPQ, the site will eventually contain four buildings.

The total credit facility of C$179 million was structured and underwritten by French bank Société Générale. Canadian construction company Pomerleau is leading the project, and the campus will cover 925,000 square feet and generate a total capacity of 86 MW.

The investment in Vantage Data Centers is the CDPQ’s latest investment in the data center sector and its second in Vantage. In May, the pension fund, along with Ares Management and Schroders Capital, agreed to provide up to 750 million euros ($814.3 million) to help Vantage expand its platform in Europe, the Middle East and Africa. Earlier this year, the pension fund participated in a $7.5 billion debt financing facility to help artificial intelligence cloud computing company CoreWeave fund its hyperscale data centers.

A hyperscale data center provides “extreme scalability capabilities and is engineered for large-scale workloads with an optimized network infrastructure, streamlined network connectivity and minimized latency,” according to information from IBM.

“The rise of data-intensive technologies and the adoption of cloud services are transforming the North American digital infrastructure market,” said Marc Cormier, CDPQ’s head of fixed income, in a statement. “Vantage Data Centers is uniquely positioned to seize this opportunity with its extensive experience in developing and operating data centers, as well as its long-standing client relationships.”

According to CBRE’s North America Data Center Trends report for the second half of 2023, data centers are attracting new capital from institutional investors due to “record tenant demand, historic low supply, strong rental growth, and investment performance.”

The report found that the average data center asking rate in North America increased 18.6% year-over-year in 2023, the sharpest-ever yearly increase. It also found that primary market supply rose 26% from the previous year and that total transaction volume of all data center asset sales increased year-over-year.

“The data center sector’s momentum is continuing this year, fueled by institutional investment and strong underlying fundamentals,” the CBRE report stated. “The reliance on data center facilities and digital infrastructure for business, commerce, and communication grows daily.”