Kiwi telco Spark New Zealand has sold a majority stake in its data centers to an investment firm.

The company this week announced it has entered into an agreement to sell a 75 percent interest in its data center business to Pacific Equity Partners (PEP).

The transaction values the business at up to NZ$705 million (US$417.6m), with Spark receiving NZ$486m (US$288m) upon completion and up to a further NZ$98m (US$58m) based on performance objectives. Spark said the funds will be used to pare down debt.

The deal is set to close – pending regulatory and customary consents, including Overseas Investment Office approval – by the end of December 2025.

Spark CEO, Jolie Hodson, said: "Through this partnership, we will realize value for our data center assets in the short term, while also continuing to participate in the growing market through our 25 percent retained stake – creating further value for our shareholders over the long term.”

The investment will be made from PEP’s Secure Asset Fund, which invests in infrastructure growth platforms. Spark will move its data center assets and operations into a new stand-alone company currently being referred to as DC Co, which will have its own board, management team, and debt financing facilities.

The DC Co has 23MW of built capacity across 11 operating data centers in New Zealand, with plans for a greenfield development on Auckland’s North Shore and further extensions at its existing site in Takanini, South Auckland.

“This strategic investment allows DC Co to leverage its strong market position as a high-quality data center network provider, to capture a significant share of the expected growth in the local data center market and position itself as a competitive option for international customers looking to grow their services in New Zealand,” Hodson added.

PEP managing directors, Andrew Charlier and Evan Hattersley, said: “PEP’s investment with Spark in its data center business aligns well with our Secure Assets strategy of partnering to invest in high-quality infrastructure growth platforms. With PEP’s backing and Spark’s partnership, DC Co is positioned for transformative growth, delivering essential infrastructure that will support cloud and AI adoption and data sovereignty in New Zealand.”

Jarden has been appointed as the financial advisor to Spark on the transaction.

Spark's data center unit – Spark Data Centres – comprises both large, centralized data centers such as those in Auckland (x3), Waikato, Wellington, and Christchurch (x3), alongside Edge locations in regional cities such as Hamilton, Tauranga, and Dunedin.

The company announced it was looking for a buyer in February. Stonepeak, PEP, QIC, Mitsubishi-owned Igneo Infrastructure Partners, BGH Capital, and TPG Capital were all said to be looking at investment. PEP emerged as the frontrunner in a report from the AFR this week.

In the FY 2025 first half-year results, Spark’s data center revenue increased 13.6 percent to NZ$25 million (US$14.8m).

Pacific Equity Partners is a private equity investment firm focusing on Australia and New Zealand. Founded in 1998, it has some AU$14 billion (US$9bn) in assets under management.