DigitalBridge still sees active investment opportunities in LatAm

DigitalBridge remains upbeat about new funding and investment opportunities in Latin America, notably in fast-growing segments such as datacenters, as it continues collecting cash for a new fund.

The US digital infrastructure-focused group has just wrapped the first closing of its third fund, raising US$2.3bn, and CEO Marc Ganzi says that a considerable amount of money is expected to flow into the region.

“We built a really good diversified Fund I and diversified Fund II. We made 10-13 investments,” Ganzi told investors in an earnings call.

“In this new fund, the same thing. We're targeting 12-16 investments. We're very constructive on Asia. We're a little less constructive on Europe. We're certainly constructive on the US and Canada and Latin America,” he said, adding that "there are a couple of interesting things in Latin America.”

The group should start being more active with Investments in the second half of 2024 and until then it is expected to continue to build the fund. The target is to raise US$8bn, but Ganzi believes it could even exceed that.

Between January and September, the group also said it raised US$5.4bn in new capital.

Despite the 2024 horizon for Fund III, DigitalBridge still plans to announce new deals this quarter and Ganzi said that DigitalBridge’s is tracking over US$30mn “of new ideas in our pipeline.”

Datacenters, which make up the bulk of DigitalBridge’s portfolio, again led the group's revenue growth in July-September. 

In Latin America, the group’s datacenter operation is concentrated on Brazilian hyperscale company Scala, which has datacenters and projects in Brazil, Mexico, Chile and Colombia.

ALSO READ: Snapshot: Scala’s pipeline of datacenter projects 

The other Latin American portfolio companies are Brazil-based tower firm Highline, Chilean fiber group Mundo, and the tower companies Mexico Tower Partners and Andean Tower Partners.

DigitalBridge lists Scala as having six hyperscale datacenters in Latin America, according to an update on the portfolio composition at end-March. 

Highline had approximately 3,000 active sites in the region of roughly total 5,500 sites, including those not-fully owned and certain micro datacenters and IoT sites.

“Active sites” represents owned and other revenue-generating sites, while “total sites” includes other structures on which the company has marketing or management rights, DigitalBridge stated.

Meanwhile, Mundo had some 3.9mn homes passed with fiber in Chile and 829,000 fiber subscribers.

Mexico Tower Partners (MTP) ended March with 2,800 active sites of a total of 3,100 in the country, while Andean Telecom Partners (ATP) had 3,500 active sites of a total of 40,000.

ATP’s portfolio of owned and managed sites encompasses Colombia, Peru, Chile and Ecuador.

US long-haul fiber network expert Zayo, which also has grid in and out of Mexico and Brazil, had 225,000km of networks deployed and around 400 markets served as of end-March.

Meanwhile, US towerco VerticalBridge, whose infrastructure is also deployed in Puerto Rico, had 8,400 active sites of a portfolio of 670,000 managed sites.

RESULTS

Overall, DigitalBridge posted US$477mn in revenues for the quarter, up 17% year-on-over, and managed to turn a US$120mn loss in 3Q22 into a US$278mn profit in 3Q23.

DigitalBridge ended September with US$74.6bn in assets under management, considering all its companies and investees, for an increase of US$24.3bn in one year.

Monthly Recurring Revenues (MRR) grew across all verticals, according to the company, led by datacenters (up 20.5% year-on-year). The company defines MRR as revenue from ongoing services that is generally fixed in price and contracted for longer than 30 days.

"Demand for AI workloads continues to be high with elevated leasing expected into 2024. Pricing remains firm as enterprises increasingly recognize inventory is tightening," the company said in its results report.

Despite the increase in datacenter revenues, DigitalBridge ended September with fewer datacenters, reaching 78 following the deconsolidation of five sites by Databank.

DigitalBridge also posted 10% MRR growth in fiber, followed by tower (6.6%) and small cells/edge (5.5%).