Investment firm Brookfield Infrastructure Partners is to acquire Compass Datacenters alongside the latter's existing investor Ontario Teachers’ Pension Plan.

Brookfield Infrastructure and its institutional partners, and existing investor Ontario Teachers’ Pension Plan, this week announced that they have entered into a definitive agreement with RedBird Capital Partners and the Azrieli Group to acquire Compass.

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– Compass Datacenters

The transaction is expected to close by year-end, subject to customary regulatory approvals. Terms of the deal were not disclosed, but previous reports suggest the deal could be valued at more than $5.5 billion, including debt.

Brookfield said Compass founder and CEO Chris Crosby, as well as the current Compass management team, will continue to lead the company post-transaction close.

The companies said the new ownership structure will provide Compass with “continued strong operational and financial support” to execute its data center campuses across multiple regions.

Founded in 2011, Compass currently operates or is developing around 16 data center sites across the US, Europe, and Israel. The company also has a modular facility offering. The company has plans to develop an 11 million sq ft data center campus in Virginia.

“The need for data storage continues to grow at an exponential rate across the globe, and Compass complements our existing platforms in South America, Europe, and Asia Pacific. Compass is a best-in-class data center platform that we have known for years and we are excited to partner with Chris, the Compass team, and Ontario Teachers’ to support Compass on its rapid growth journey,” said Sam Pollock, CEO of Brookfield Infrastructure.

Ashvin Malkani, senior managing director, Technology Group, Private Capital at Ontario Teachers’, added: “We are pleased to welcome our longstanding partner Brookfield Infrastructure as a co-controlling shareholder in Compass. We look forward to working with them, Chris, and the rest of Compass’ top-tier management team on the company’s next growth phase.”

Ontario first invested in Compass alongside Redbird in 2017. Israeli real estate developer Azrieli Group bought a 20 percent stake in the company for £135 million ($172m) in 2019.

The Deal first reported that Compass was exploring a sale in February, with the company having started the process in October 2022. Brookfield was reportedly bidding against DigitalBridge to acquire the company.

“Our original thesis around Compass was building a world-class data center platform focused on global hyperscale customers through the development of customized campuses,” said Tyler Alexander, managing director at RedBird. “Over a series of success-based investments that enabled disciplined growth, we executed against this thesis and built Compass into one of the preeminent global data center platforms. This outperformance is a credit to Chris Crosby and the full management team, as well as our partners in Ontario Teachers’ and the Azrieli Group.”

Compass CEO Chris Crosby added: “We’re extremely thankful for RedBird and Azrieli’s investment, deep expertise, and unwavering support over the years as we’ve built our business. I’m excited to embark on the next chapter of Compass’ evolution in partnership with Brookfield Infrastructure and Ontario Teachers’, two leading investment firms."

Infrastructure investor Brookfield has significant data center holdings and has made billion-dollar deals in the space before.

The firm recently acquired European data center firm Data4 in a deal that reportedly valued the company at around €3.5 billion ($3.77bn). The company also jointly owns data center ventures in India (BAM Digital Realty) and Latin America (Ascenty) with Digital Realty, and also owns DCI Data Centers in Australia/New Zealand. On its website, Brookfield says it owns some 50 data centers globally, along with more than 163,000 tower & rooftop sites and some 22,000km of fiber.

The Ontario Teachers’ Plan has invested in a number of data center and digital infrastructure companies including PDG, Sidewalk Infrastructure Partners, TierPoint, and New Zealand telco Spark. It previously invested in Metronode, which was sold to Equinix in 2017.

Goldman Sachs & Co. and Guggenheim Securities served as joint financial advisors to Compass and RedBird on the transaction. Deutsche Bank Securities Inc. also served as debt financing advisor.

Brookfield Infrastructure engaged BMO Capital Markets and Scotiabank as joint financial advisors and Kirkland & Ellis LLP as legal counsel. TD Securities is serving as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to Ontario Teachers’. Fried, Frank, Harris, Shriver & Jacobson LLP, and Wick Phillips, LLP served as legal counsel to Compass. DLA Piper served as legal counsel to Compass Management. Fried Frank served as legal counsel to RedBird.