Principal Global Investors has closed a data center fund dedicated to acquiring European assets.
The investment management firm announced this week that Principal Real Estate, its real estate team, has closed a €155 million ($175.8m) data center fund, beating its initial target.
The company said the Principal European Data Centre Fund beat its target, and marks the close of one-third of its total equity hard cap of €450 million ($510.5m). The fund was raised through subscriptions from seven investors globally, including asset managers, pension funds, and insurance companies.
The money will be used for manage-to-core data centers, with 60 percent to be spent in the key European data center markets including Germany, the Netherlands, France, the United Kingdom, and Ireland. The remaining 40 percent will be split between Spain, Italy, and Switzerland.
“We have been evaluating the European data center sector for the last 2-3 years,” said Paul Lewis, director of European data centers for Principal Real Estate.
“Data centers will remain appealing investment opportunities given their diversification benefits and strong risk/return profile, and we continue to believe there is intrinsic value in standing data center assets across Europe’s primary and secondary markets given the long-term, structural tailwinds supporting the sector.”
This latest deal comes after Principal’s June 2021 €471.4 million ($534.7m) data center fund in the United States, which was also over-subscribed.
Principal Real Estate said that since entering the data center market in 2007, it has committed over €1.75 billion ($1.985bn) in data center acquisitions and developments and owns more than €1.18 billion ($1.338bn) in data center REITs.
Data center investment funds are consistently raising more capital than targeted. Earlier this month, Stonepeak, an investment firm specializing in infrastructure and real assets announced the close of its Stonepeak Infrastructure Fund IV with $14 billion of aggregate capital commitments, significantly more the fund’s hard cap.