Starwood has taken a 50pc stake in Echelon, which was given an enteprise value of €2.5bn from this strategic investment.
Irish-owned Echelon Data Centres is receiving a major strategic investment of $850m from Starwood Capital Group, making the investment firm a key shareholder in the business.
The transaction means Starwood will gain a 50pc stake in Echelon, which will add to its growing data centre portfolio – the firm claims to have committed approximately $8bn across 1.5GW of capacity to date.
The strategic investment values Echelon at approximately €2.5bn in enterprise value and its capitalisation is further primed for growth through a new €900m debt facility, provided by Morgan Stanley and United Overseas Bank.
Starwood and Echelon said the latest investment will be used to support the continued growth of the Irish-owned company. Echelon currently has six facilities in Ireland and the UK – either online or under development – with a combined potential capacity of around 800MW.
“This transaction materially enhances our data centre footprint and capabilities in Europe,” said Starwood Capital CEO and chair Barry Sternlicht. “We are confident that with the Echelon team and Starwood Digital Ventures we will continue to find further opportunities to deploy capital into transactions with attractive risk adjusted returns for our investors, both in Europe and the US.”
Echelon and Starwood have been long-standing partners, as in 2022 Starwood affiliates provided a debt financing agreement of €855m to Echelon, to facilitate the construction and completion of four data centres in Ireland.
“Starwood Capital’s scale, access to capital and track record position Echelon incredibly well to service our customers’ growth requirements on global basis,” said Echelon CEO Niall Molloy. “We look forward to the continued growth of the business and expansion into new European markets and beyond.”
Data centres continue to be a controversial topic due to the amount of pressure they can cause to national grids. Figures released by the Central Statistics office last year showed that data centres consumed 18pc of Ireland’s metered electricity in 2022, up from 14pc in 2021. The figure was only 5pc in 2015.
Last month, a report from the International Energy Agency claimed that data centres are expected to consume nearly a third of Ireland’s total electricity by 2026.
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