The deal values Spark NZ's data centre arm at $705m
Russell McVeagh has advised Pacific Equity Partners (PEP) as it acquired a 75% interest in Spark New Zealand’s data centre business.
The deal values the business at a maximum of $705m representing a FY25 pro-forma EBITDA multiple of 30.8x2. According to a media release by Spark, PEP’s investment will come via its Secure Asset Fund, which is earmarked for infrastructure growth platforms.
Bringing in a capital partner creates a financing pathway to enhance Spark’s planned 130MW+ data centre capacity development pipeline. Once the acquisition is completed, cash proceeds to Spark are estimated to be at ~$486m, with additional deferred cash proceeds of up to ~$98m subject to the fulfilment of certain performance-based objectives by the end of the 2027 calendar year, according to Spark. The proceeds will be applied to cut down the company’s group net debt.
In line with the deal, Spark will transfer its data centre assets and operations into a standalone company currently called DC Co. The new entity will be led by its own board and management team; debt financing facilities will be non-recourse to Spark.
“DC Co has a leading data centre platform in a growing market, with over 23MW of built capacity at 11 operating data centre facilities across New Zealand, and advanced plans in place for a greenfield development on Auckland’s North Shore, as well as further extensions at the Takanini site in South Auckland”, Spark CEO Jolie Hodson said in the Spark media release. “This strategic investment allows DC Co to leverage its strong market position as a high-quality data centre network provider, to capture a significant share of the expected growth in the local data centre market and position itself as a competitive option for international customers looking to grow their services in New Zealand.”
PEP managing directors Andrew Charlier and Evan Hattersley said the investment in Spark “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”, Charlier and Hattersley said.
The deal is pending Overseas Investment Office approval and other regulatory and customary consents. It is set to complete on 31 December.
The Russell McVeagh team headed up by partners Michael Loan and David Hoare assisted on all aspects of the deal. The partners worked alongside partners David Weavers and Natalie Steur; special counsel Hamish Beckett; senior associates Matt Consedine and Sam Kember; senior solicitor Sophie Chester; and solicitors Britney Clasper and Cole Murray.
“Scaling data centre capacity to meet the growing demands of cloud and AI technologies will play a key part in New Zealand’s digital future, and this deal reflects that momentum”, Loan and Hoare said.
The broader PEP team included Charlier, Hattersley, Michael Bendeli, Jordan Schumann and Ashley Chen. The Spark team included Melissa Anastasiou and John Wesley-Smith.
Russell McVeagh also worked with Webb Henderson on the transaction. Jarden was appointed as Spark’s financial advisor.
