This week, Blue Owl announced its acquisition of IPI Partners for approximately US$1 billion, marking a significant move into the digital infrastructure space.
Ana Arsov, global head of private credit at Moody’s Ratings, commented: “Blue Owl’s acquisition of data-centre fund manager IPI Partners underscores the pivotal role private credit is poised to play in meeting the needs of global investment in new data centre capacity which is expected to surpass $2 trillion over the next five years.
“This transaction is emblematic of a broader trend, heralding a new wave of financings poised to support the forthcoming expansion in data centre capacity."
As digital infrastructure continues to evolve, the demand for new data centres has skyrocketed, driven by increased data production, widespread cloud computing adoption, and the growing need for AI technologies.
In a recent report, Moody’s analysts highlighted the urgent need for capital within the data centre sector, underscoring the crucial role private credit markets will play in reshaping the industry’s financial ecosystem.
“Blue Owl’s purchase of IPI provides on the ground insight into where and how they can deploy significant amounts of new equity to build new data centres at a time when demand for new data centre capacity materially outweighs available supply,” said John Medina, Moody’s Ratings senior vice-president of project and infrastructure finance.
The report from Moody’s emphasised that global investment in new data centre capacity is expected to total approximately US$2.2 trillion, averaging around US$443 billion annually from 2024 to 2028.
So far this year, nine US data centre ABS transactions, totalling US$4.7 billion, have emerged in the private credit markets, following 14 deals worth US$6.2 billion in 2023. Furthermore, the first two European data centre ABS transactions, sponsored by Switch, reached financial closure in 2024, indicating a growing trend in overseas markets.
Moody’s also highlighted that the data center sector is poised for a refinancing boom, with this expected provide an ongoing need for for private credit.
Specifically, the ratings agency anticipates a surge in refinancings as new facilities begin operations and start generating lease payments, enhancing the credit profiles of their initial investments.
"As banks and equity investors look to refinance construction loans or initial investments, developers and sponsors will diversify their funding strategies, tapping into corporate credit, leveraged loans, banking facilities, CMBS, ABS, private credit, and project finance markets," Arsov said.
