Digital infrastructure forms the essential – albeit unglamorous – backbone of the digital economy, or the ‘plumbing of the internet’ as we call it. The sector consists of mobile towers, data centres, fibreoptic networks and wireless sensor networks, along with the increasingly vital software-based infrastructure for cloud systems. These physical foundations are critical to supporting both communications and the broader economy.
Cordiant implements a Buy, Build and Grow approach, investing in high-quality, mid-market platforms with significant growth potential.
According to McKinsey Global institute and JPMorgan, digital infrastructure is the third largest infrastructure asset class after energy and roads, accommodating unprecedented volumes of data traffic and levels of growth. As demonstrated in the pandemic years of 2020 and 2021, digital infrastructure is now viewed as part of a nation’s critical assets. These are long-lived physical assets, typically leased to blue chip customers on a long-term basis. The end-users (whether telecoms companies or corporations) often make use of these quite stable digital infrastructure assets to support dynamic business models characterised by technological change.
As is the case in other sectors, Cordiant’s team both understands this sector and has provided senior executive leadership to some of the largest and most successful companies in the sector. Whether it’s carving out an asset from a telco or working with entrepreneurs to scale their business, Cordiant provides more than just capital – we deliver operational support and valuable insights to help businesses grow.
Investment Spotlight
On The Hudson
If fibre cables constitute the road network across which data flows, then one of the internet’s critical crossroads lies within the handsome art deco exterior of a skyscraper on the edge of Lower Manhattan.
In January 2022 Cordiant Digital Infrastructure (Cordiant Digital’s London-listed “core digital infrastructure fund”) purchased the assets of DataGryd, thereby acquiring close to 200,000 square feet of data centre and technical space in this building, which is known as 60 Hudson.
“This building has been serving a critical role in American communications for almost a century” Explains Benn Mikula, Cordiant Co-CEO and Managing Partner. “Erected by the Western Union Corporation as a telegraph hub, it was engineered to accommodate vast amounts of heavy telegraph equipment and copper cabling. The quality of the building, and the pre-existing communications routes leading to it, allowed it to remain relevant through the transition from telegraph to telephone (analogue and digital circuit switched), and from telephone network to Internet. Today hundreds of carriers and content providers occupy space in this building so they can balance traffic and shift traffic from their network to other networks.”
“We understood the critical nature of 60 Hudson, and found in DataGryd (which we have since renamed Hudson InterXchange) a combination of existing tenants, high quality infrastructure and expansion potential. This is not a typical colocation facility, and the understanding of the precise role of interconnect data centres was key to our investment case.”
“Everyone talks about wanting data centres, but within major cities you need one or two interconnection points where hundreds of carriers meet so they can move traffic from one network to another,” explained Benn Mikula Cordiant’s co-CEO. “A lot of investors may struggle to understand that. But because of our sector knowledge we know the interconnect niche.”
“This is a strategic asset with significant growth potential,” said Steven Marshall, Chairman of Cordiant’s Digital infrastructure practice (and formerly president of NY-listed digital giant American Tower). “It is a company that can deliver scale, high quality infrastructure, power and technical skill in what we believe is the most connected building in the most connected city on the planet.”
Linking telecoms companies, software firms, financial giants, content deliver networks, cloud computing operators and other key players on the Internet is the defining feature of interconnect centres. Booming data demand drives a knock-on desire for connections–so networks can more effectively talk with one another. In consequence Cordiant Digital plans to invest $75 million to nearly double Hudson InterXchange’s footprint.
