Switch Seeks $2B Funding Round Amid AI Data Center Boom
Synopsis
The data center company is reportedly raising about $2 billion in a funding round led by Andreessen Horowitz as surging AI demand drives investment in digital infrastructure.
U.S.-based operator Switch has initiated efforts to raise around $2 billion in new equity capital at a valuation close to $50 billion including debt, according to people with knowledge of the discussions. The Switch data center funding round is ongoing, but it remains subject to change depending on investor demand and shifting market conditions.
The data center funding round, according to the sources, is expected to attract Andreessen Horowitz with its venture capital affiliate aiming to invest about $400 million and with Goldman Sachs being retained as the adviser.
The discussions are part of a larger package to raise both equity capital and establish a suite of predetermined debt facilities for the buildout.
Funding structure and earlier capital stack
The data center financing round for Switch comes at a time when the company is dealing with a complex capital stack. Last year, the company secured roughly $2.6 billion in financing commitments from lenders for building new data center construction’s required power infrastructure.
Other sector observers also note a variety of financing and debt facilities which could have been put in place for expansion efforts by other firms operating within the digital infrastructure arena, an industry to which Switch belongs, as well as the broader world of infrastructure investment firm Brookfield and KKR.
Separately last year, news circulated regarding the possibility of a SoftBank acquisition of IPL, but no deal materialized, and the company has remained under the control of DigitalBridge Group and IFM Investors, who purchased Switch in 2022 in a $11 billion acquisition.
AI demand reshapes global data center investment
The Switch data center financing round also appears to confirm the intensifying pressure on operators, with demand for computing power spiking amid artificial intelligence demand. High-density processing power is also being propelled by cloud apps, machine learning models, and enterprise AI systems.
Switch operates multi-million-dollar, hyperscale data centers throughout the U.S. And serves corporate customers, such as leading logistics companies, technology enterprises and financial institutions. Expanding its capabilities and building new facilities is also linked to its power infrastructure and land needs, which are both presenting growing constraints.
Across the globe, sentiments surrounding digital infrastructure investment are rising with both public and private sector investors across North America, Europe and Asia-Pacific lining up to approve new data center development, especially for cloud and AI. Even countries like Australia are seeing increased interest from cloud and AI investments in building out their digital infrastructure footprint.
Ownership position and market backdrop
DigitalBridge Group continues to own the majority share in the company since its takeover in 2022. With the data center financing round for Switch, market players say it is part of an accelerating capital cycle as infrastructure assets are reassessed due to the burgeoning interest in data center facilities from the rise of AI.
The McKinsey study estimate suggests that global data center capacity will grow at a high double-digit rate annually by the year 2030 on the back of AI and data-related computing demand.
Source: Bloomberg
Follow Inspirepreneur Magazine for daily global business news.
Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
You Might Also Like
The Uber Legacy Driven By Travis Kalanick
How Operational Efficiency Fueled Indigo Airlines’ Expansion
