AI infra demand drives deal momentum in engineering; Cube Infrastructure to sell Firstcolo to CVC DIF
Good morning, Nina Lindholm here with the Europe Wire from the London newsroom.
With uncertainty around AI impact looming over software valuations, blue collar industries are enjoying attention from private equity. We focus on engineering today – although some describe the segment as gray collar rather than blue – to kick off this morning.
Just this week, we saw two deals in the sector: a €750 million continuation vehicle by Exponent, as well as HIG Capital’s completed acquisition of a mechanical and electrical engineering services provider. We’ll delve into those and other recent transactions to start.
Not straying far from the opening topic, we have a fresh deal involving a data center operator. Cube Infrastructure has agreed to sell its stake in Firstcolo to CVC DIF.
We finish with They Said It, where I’ll highlight some of the best quotes from PE Hub stories from the past week.
Rapid growth
Private equity’s bet on engineering businesses could be a sign of sponsors targeting segments resilient to AI disruption. Engineering services that operate on AI infrastructure sit in a sweet spot – enjoying tailwinds created by growing data center construction demand. That’s exactly what this week’s engineering deals have in common.
On Tuesday, Exponent announced the close of an approximately €750 million single-asset continuation vehicle to extend its partnership with H&MV Engineering.
The transaction values H&MV at €1.4 billion, representing almost a twelvefold increase since Exponent’s investment in 2022 and almost doubling its valuation since welcoming minority investors, LGT Capital Partners and direct equity funds managed by Hamilton Lane, in 2024.
Based in Limerick in Ireland, H&MV designs, builds and energizes high-voltage infrastructure that enables data centers, battery energy storage and electricity networks. It works with hyperscale technology companies, co-location providers, utilities and renewable energy developers.
Since Exponent’s investment in 2022, H&MV has transformed into a global business generating more than €1 billion of revenue.
Also on Tuesday, HIG Capital announced that it has completed the acquisition of Phoenix ME, a London-based provider of mechanical and electrical engineering services.
Phoenix is a provider of integrated mechanical and electrical engineering services, serving the data center, life sciences, infrastructure and commercial end markets. The business has worked on several of London’s highest-profile infrastructure developments with exposure to the data center and life sciences sectors, according to the company. Founded in 1931, Phoenix operates across the UK and mainland Europe.
“Phoenix’s end markets will enjoy rapid growth over the coming years,” said John Harper, managing director of HIG Capital in London, in a statement.
HIG’s been busy in the sector. In July, the investor entered an agreement to acquire a majority stake in Terras Group, an infrastructure engineering and construction services provider in the DACH region.
Outside infrastructure, we’ve seen deals in civil and ground engineering, such as CataCap-backed Thranekær picking up Denmark’s Ingeniørgruppen, and Algebris Investments agreeing to acquire a 70 percent stake in Geosec International.
Parting ways
Sticking with data centers and infra, as Cube Infrastructure Managers has agreed to sell its stake in Firstcolo to CVC DIF.
Firstcolo is a Frankfurt-based colocation data center operator. Cube IM acquired the business in 2022 through its third flagship fund.
Founded in 2007, Firstcolo provides colocation, cloud hardware, connectivity and managed services to more than 350 enterprise customers. The company operates two established, near-fully-utilized data centers in the Frankfurt region.
Since Cube IM’s acquisition, Firstcolo has strengthened its market position, according to a press statement. Working alongside the management team, Cube IM supported the growth of the platform, nearly doubling adjusted EBITDA, securing 24MW of power in the “highly constrained” Frankfurt market, the statement added.
CVC DIF, the infra strategy of CVC, will support Firstcolo’s expansion in the German colocation data center market.
They Said It
Let’s move over to They Said It, where I highlight star quotes from this week’s PE Hub stories.
My colleague Obey Martin Manayiti caught up with Ardian co-CEO Mark Benedetti to learn about the firm’s strategy in Europe and North America. A section of their conversation caught my attention, as it fits well with our earlier topic of AI infrastructure:
“One thing that has struck me is how quickly AI has become an infrastructure theme as well as a technology theme. Rising computing requirements are creating demand for data centers, power generation and the broader digital infrastructure required to support AI workloads. I believe we are still in the early stages of that cycle.” Mark Benedetti, co-CEO, Ardian
That’s all from me. John R Fischer will be with you later today with the US edition, and I’ll write to you again after the weekend.
Cheers,
Nina
