BlackRock Inc. has announced plans to invest up to £500 million ($678 million) in Britain’s data center sector, targeting an often overlooked segment of the market. The announcement comes as Chief Executive Officer Larry Fink prepares to accompany US President Donald Trump on his state visit to the United Kingdom.
The asset manager has purchased a site in west London to launch a new venture with data center operator Gravity Edge, according to a statement. The joint initiative, named Digital Gravity Partners, will focus on acquiring existing data centers with unused capacity, said Thomas Mueller-Borja, BlackRock’s global co-head of real estate, in an interview.
Global investors are increasingly turning to data centers, anticipating that the rapid adoption of artificial intelligence will drive a surge in demand for infrastructure to support it. This has prompted major asset managers to compete for large-scale facilities that cater to hyper scalers such as Amazon’s AWS, Microsoft, and Google.
However, the UK faces significant challenges, including some of the highest electricity costs in Europe and a power grid that is struggling to keep up with demand. Mueller-Borja noted, “We are trying to find existing assets that are underutilized but have power. We aren’t doing ground up development for hyper scalers.”
The initial investment of more than £100 million comes from BlackRock’s €1.2 billion Europe Property Fund VI, which was completed in July. BlackRock’s strategy of targeting smaller facilities that serve enterprise clients is designed to broaden the pool of potential buyers. This contrasts with the large-scale projects for hyper scalers that often require billions in capital investment.
Paul Tebbit, BlackRock’s other global co-head of real estate, said, “We are always really focused on exit liquidity. One of the attractive things about this strategy given the lot sizes we are creating, we can see real estate funds or infrastructure funds being the end buyer.”
Larry Fink is expected to be among a group of Wall Street leaders and Silicon Valley executives joining President Trump during his visit to the UK this week, where cross-border investment deals worth billions will be announced. Earlier, sources had reported on BlackRock’s investment plans.
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