Aware Super tips $746m into US data centre operator Switch

afr.com:

Aware Super has made its first data-centre play, cutting a $US500 million ($746 million) cheque to buy a stake in Switch after it was taken private by IFM Investors and NYSE-listed DigitalBridge for $US11 billion in December.

Switch has 500 megawatts of capacity at its 15 data centres spread across five campuses. 

The local superannuation giant will appoint a non-executive director based in the United States to represent it on the board of Switch, which has 500 megawatts of capacity at its 15 data centres spread across five campuses. Its investment is in partnership with DigitalBridge.

Switch pulled in revenues of $US174.5 million in the September quarter – 10 per cent higher year-on-year – according to its last accounts published on the NYSE before the take-private came into effect in December. It had about $US69.5 million in adjusted earnings.

Aware Super’s head of infrastructure Mark Hector and portfolio manager Jiren Zhou, who led the deal, said Switch was expected to make returns in the order of low double digits in IRR terms.

Future growth would come from two levers: a double-digit annual increase expected in data volumes, especially with the proliferation of artificial intelligence-led businesses; and corporates outsourcing their data storage.

“US is the perfect market. Data-centre vacancies are at 2.8 per cent nationally and typically a lot of the capacity is pre-sold,” Zhou told Street Talk, adding that Switch’s churn rate was almost zero and clients may vary their volumes but almost never leave.

Hector said Aware Super, which has a $16 billion allocation to infrastructure assets (and growing) has been casting its net beyond traditional ports and road. It has been hunting for infrastructure opportunities in two