DigitalBridge mulling second continuation fund

The first stage of DigitalBridge’s debut continuation fund for data centre platform DataBank was completed this past quarter, with the firm recapitalising the asset by selling “over 35 percent” of its stake in the company, according to the firm’s Q3 earnings.

The successful continuation fund process means DigitalBridge is looking to copy that strategy with its data centre asset, Vantage SDC, chief executive Marc Ganzi revealed on the firm’s earnings call on Friday.

“Vantage SDC continues to remain on our balance sheet. It’s not in a continuation fund vehicle today. It is in a permanent capital vehicle,” Ganzi said. “We do maintain operating control of that asset and we’re thinking around a couple of different ideas on how we would transition that asset into our investment management platform. But I think what you’ve seen in this quarter is the final sort of piece in the puzzle around… what we believe is the asset-light approach to owning and operating digital infrastructure.”

DataBank – first acquired by DigitalBridge in 2016 – was put into a perpetual continuation vehicle this summer, when DigitalBridge brought on new investors EDF Invest and Swiss Life Asset Management. At the time, the two companies paid a collective $1.2 billion to existing investors for the stake. In its Q3 earnings report, DigitalBridge revealed that that number now stands at $1.5 billion, although the exact equity breakdown remains undisclosed.

For fundraising as a whole, DigitalBridge expects to exceed its yearly target, adding $700 million to its core strategy and $400 million to its credit strategy in Q3, with Ganzi stating that the group expects to formalise first closes on the two strategies in Q4.

DigitalBridge has used secondaries market technology on its assets before. In 2020, Goldman Sachs Asset Management made a $200 million preferred equity investment from its real estate fund into a portfolio of five assets managed by Colony Credit Real Estate, a subsidiary of Colony Capital, Secondaries Investor reported.

Colony Capital later rebranded to Digital Colony and then, last year, to DigitalBridge.

– This report has been updated to show that Vantage SDC is a data centre asset.