Mubadala Investment Company, Abu Dhabi’s strategic investment arm, is expanding its digital infrastructure portfolio with an investment in UK data centre developer Yondr Group, tapping into the fast-growing sector that supports the huge amount of data produced by users.
The investment in Yondr, which currently has 58 megawatts of operational capacity and 878 megawatts in reserve, was made alongside an exiting investment from Apollo Asset Management, Mubadala said on Wednesday.
The size and value of Mubadala's investment in London-based Yondr were not disclosed. US asset manager Apollo Global Management made its investment in Yondr in June 2023.
Yondr is expected to play a “key part in providing solutions for some of the world’s fastest-growing corporations”, Mounir Barakat, senior executive director of digital infrastructure at Mubadala, said.
This is the result of “strong growth in demand for hyperscale data centres in response to the rising data demands from AI adoption, 5G and IoT [Internet of Things]", he added.
Remote activity, largely set off by the coronavirus pandemic, has led to increased data consumption fuelling demand for cloud services.
The use of these services continues to grow in the Middle East amid the rise of technology savvy consumers and an evolving digital landscape, underpinned by governments' efforts to develop the economy.
This has given data centre and cloud providers an incentive to tap into the potential offered by the region.
Among the most notable global companies that have invested in the region are Microsoft, Amazon, Oracle, IBM and Alibaba Cloud, which have all opened cloud and data centres in the Middle East.
The Middle East's data centre market is projected to grow to more than $9.6 billion by 2029, at a compound annual rate of 9.52 per cent, from an estimated $5.57 billion in 2023, data from Research and Markets shows.
That serves as a "big diversification bet" for sovereign wealth funds like Mubadala to allow their holdings to be concentrated on artificial intelligence and data processing, collectively the "next big thing", said Vijay Valecha, chief investment officer at Dubai-based Century Financial.
"Data and AI integration are now visible in all aspects of the end consumer's life. As such, the outside potential of the data centre growth is likely to remain persistent for a considerable amount of time," he told The National.
"Major GCC nations are competing to be the first to capture this theme and leverage their past investments for their economic benefits."
Mubadala's latest investment into the data centre space follows previous ventures, including an up to $500 million investment in US-based Cologix in 2019, a $350 million investment in Singapore's Princeton Digital Group in 2022 and an undisclosed amount in pan-American company Aligned Data Centres in 2023.
The fund is also investing in other global fibre network providers, including in the UK’s CityFibre and GlobalConnect, giving it a bigger footprint across Northern Europe.
Mubadala will be a “key financial partner” for Yondr, whose investment will help “accelerate our growth and continue delivering sustainable data centre solutions to our clients worldwide, meeting the increasing demand for capacity”, said Chester Reid, chief financial officer of Yondr.
Mubadala currently has investments in six continents across multiple sectors and asset classes.
Its total assets under management in 2023 rose 9.5 per cent to Dh1.11 trillion ($302.2 billion), having invested Dh89 billion in technology sectors including artificial intelligence, digital infrastructure, life sciences and clean energy.
