Wall Street banks are preparing to raise billions of dollars by taking data centre companies public, as investors continue to flock to any offering tied to artificial intelligence spending. The initial public offering for a Blackstone Inc. data-centre acquisition vehicle next week is expected to kick off a wave of activity over the next 18 months.
Major IPOs on the Horizon
Together with Singapore-based DayOne Data Centers Ltd., these offerings could raise close to US$7 billion in aggregate, according to Bloomberg News. Brookfield Infrastructure Partners-backed CSquare has filed confidentially, and at least six other companies are considering U.S. IPOs, sources familiar with the matter say.
Investor Demand for AI Exposure
Money managers are eager for new ways to invest in the industry, which is projected to spend hundreds of billions on AI infrastructure. Companies in sectors from ventilation to nuclear power are highlighting their ties to AI as they go public. Data centre firms are now testing just how much exposure the market demands.
“We haven’t seen data centre IPOs come en masse yet, but that will certainly be a theme this year, next year and into 2028. It’s coming,” said Eddie Molloy, co-head of global equity capital markets at Morgan Stanley.
Existing Public Data Centre Stocks Soar
Shares of Equinix Inc. and Digital Realty Trust Inc., two already-public data centre REITs, are near record highs, outpacing the S&P 500 Index by over 20% this year. Three of this year’s five largest U.S. listings are AI-adjacent companies. Ventilation firm Madison Air Solutions Corp. and electrical equipment maker Forgent Power Solutions Inc. both cited revenue from data centre customers in their filings, and their stocks have surged 46% and 55% respectively since their debuts.
“Stepping back, data centres are way underrepresented in the public markets and that will change,” said Molloy. He expects firms to optimize their portfolios and consider leverage or tenant concentration before going public.
Challenges with Debt and Leverage
The debt attached to data centre firms could cause some investor hesitation. “The market is still working out the right leverage for some businesses,” said Edward Byun, global head of technology ECM at JPMorgan Chase & Co. “Given how quickly many of these companies are growing and how differently their debt is structured, leverage will be a point of investor diligence.”
Given the sector’s massive capital needs, tapping public investors—who largely lack access to private-market financing—may have been inevitable. “They need the capital, there’s not enough capital out there to fund all of this without going to the public markets,” said Greg Kuhl, global property equity portfolio manager at Janus Henderson.
