Sale of stake values Irish data centre operator Echelon at around €2.5bn

Echelon Data Centres CEO Niall Molloy. Picture by Peter Houlihan

Global private investments firm Starwood Capital has agreed a deal to invest €850m in Irish data centre operator Echelon, which was founded in 2016 and is now a significant player here serving large tech multinationals as well as in the UK.

The Starwood will provide approximately €850m to fund continued expansion in exchange for a 50pc stake in the business, which is headed by founder Niall Molloy.

The investment implies an enterprise value of approximately €2.5bn, the companies said in a joint press release.

Growth is also being supported by a new €900m debt facility provided by Morgan Stanley and United Overseas Bank (“UOB”).

Echelon currently has 140MW of capacity that is either operational or in late-stage construction, including a fully pre-committed 91.4MW hyperscale campus in Dublin.

In addition, the company has a strategic landbank in excess of 500MW, of which 168MW is in advanced stages of agreement with occupiers and expected to commence construction in H1 2024.

Echelon’s Niall Molloy said: “Starwood Capital’s scale, access to capital and track record position Echelon incredibly well to service our customers’ growth requirements on global basis. We look forward to the continued growth of the business and expansion into new European markets and beyond.”

The company currently has four Irish sites under development, with a combined potential capacity of more than 500MW (DUB10 – Clondalkin; DUB40 – Grange Castle; DUB20 and DUB30 - Arklow, Co Wicklow). The portfolio also includes a 20MW data centre facility in London’s Docklands with another under construction and a 30MW data centre in Chesham, Buckinghamshire.

Starwood’ is best known as an investors in hotels and holiday resorts globally but previous Irish deals have included offices and other commercial real estate. Globally it oversees a portfolio valued at around $115bn.

The Echelon investment is being made through its Starwood Opportunity Fund XII and Starwood Real Estate Income Trust.

Deutsche Bank acted as lead financial advisor and Morgan Stanley acted as financial advisor for Starwood Capital, while Kirkland & Ellis and Arthur Cox acted as legal counsel.

Eastdil Secured acted as lead financial advisor and Nomura acted as financial advisor for Echelon Data Centres, and William Fry acted as legal counsel.

Morgan Stanley and UOB acted as Mandated Lead Arrangers on the financing. Allen & Overy, Arthur Cox and A&L Goodbody acted for Echelon Data Centres on the financing and due diligence.