Global private equity fund Apollo announced on Wednesday that it has reached an agreement to acquire a majority stake in Stream Data Centers, a prominent builder of hyperscale data centers based in Dallas.
While the financial details of the transaction were not disclosed, Apollo indicated that the deal with Stream Data Centers (SDC) positions them to potentially invest billions into next-generation digital infrastructure.
As the fourth-largest alternative asset manager in the world, with over $800 billion in assets under management, Apollo joins other investment giants like Blackrock in capitalizing on the surging demand for digital infrastructure.
The firm forecasts that several trillion dollars will be required over the next decade to address escalating data center demands, driven by increases in energy usage, developments in artificial intelligence, and advancements in semiconductor technology.
Apollo plans to scale its investments in this vital infrastructure through Stream and additional initiatives. Since 2022, they have already committed about $38 billion toward renewable energy and compute capacity.
In a joint statement, Apollo partners Joseph Jackson and Trevor Mills expressed confidence in Stream’s capabilities: “With deep development expertise and a valuable long-term land fund in key growth markets, we believe Stream is uniquely positioned to serve the infrastructure needs of the world’s most sophisticated technology customers.”
Stream Data Centers was founded in 1999 and currently has active site selections across 25 states.
In Texas alone, the company has executed 14 data center projects, which range from under-development sites to fully operational data centers that have been sold to major corporations.
The investment from Apollo will accelerate the development of 650 megawatts of power capacity across campuses located in major cities like Chicago, Atlanta, and Dallas.
Despite the positivity surrounding this growth, the data center industry’s expansion presents challenges for Texas’ infrastructure.
Texas operates an independent power grid, which differentiates it from the rest of the United States. Recent estimations from researchers at the University of Houston suggest that the state’s electricity requirements could potentially double by 2035, largely due to the growth of data centers.
Additionally, the surge in data center development is anticipated to strain water resources, with projections indicating a statewide water deficit of 3,600 million cubic meters—approximately 3 million acre-feet—by 2035.
The challenges are compounded by the tendency of data centers to be constructed outside of population centers, complicating efforts to meet infrastructure demands.
“Much of the increase in water demand, similar to electricity, is coming from regions in the state that were previously not considered significant demand centers,” stated researcher Aparajita Datta.
Although Texas has initiated actions to alleviate these infrastructural issues, more responsive and effective policy measures are essential to ensure grid reliability, address geographic mismatches between electricity demand and supply centers, and maintain the state’s competitive standing in the energy sector.
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