British Actis comes to look for Chilean investments, together with Frontal Trust, for data centers in China

Owner of the local companies Aela, Atlas and Pelicano it wants to attract local institutional investors to co-invest directly in these assets or to contribute to a more diversified investment fund.

This time, it does not come to seek investment opportunities, but investors. British management company Actis, which manages more than US$15 billion worldwide, is looking for Chilean contributors to co-invest with it in data centers in China and will do so through the local management, an alternative asset specialist, Frontal Trust, which currently manages US$ 1,080 million.

But for the manager established by the UK government to channel investments into its former colonies in Asia and Africa and later privatized, Chile is not a strange country. ACTIS is a partner in three clean energy companies in the national territory: two solar energy companies, Atlas and Pelícano, and one wind energy company, Aela.

In addition, the British firm was one of the candidates from overseas to acquire 25% of Transbank owned by Santander. To date, the transaction has not been completed. Having invested in the country, the manager up to now did not have Chilean clients, nor of any country in Latin America. “This is the first time we have partnered with someone else to help us get investors and we selected Frontal Trust for this purpose”, says Mexican Daniel Pastor, director of Investor Development Group Americas of Actis.

Invest in data infrastructure

Data centers are the physical infrastructure required for data processing. “A data center has a very important component of what could be defined as a technology investment. It consumes energy like a small city, so it could be seen as an energy project and of real estate because it involves the construction of a relatively large space to store all the requirements it has”, says Pastor.

In particular, in Actis, they were inclined to invest in China because they identified a great need for these centers in that country. “China has three times as many people involved in its day-to-day Internet, compared to the United States, and China has only 40% of the capacity as the US”, says the company’s director.

In addition, the pandemic has accelerated some factors that were already giving impetus to this sector: e-commerce, remote operations, teleworking and the emergence of 5G. “The data centers are booming and we expect them to have annual growth above 30%”, says the Mexican.

Cloud customers

ACTIS partnered in China with Chayora, one of the leading developers of data centers, who already built the first part of a 32-hectare data center park in the city of Tianjin, near Beijing. Now, the goal of the financing they are looking for is to build what is missing and operate data processing centers.

70% of the installed capacity of data centers in the Asian giant is demanded by companies offering cloud services. “A potential buyer of these data centers is Alibaba, which has almost 50% market share in cloud services in China”, says Eduardo Gomien, Institutional Distribution manager for Frontal Trust. “Amazon Web Services, Microsoft that have joint ventures with local partners and other Chinese companies that offer cloud storage services, are also potential customers of this site once it has been developed,” he says.

Institutional Investors in Chile

Chilean fund manager Frontal Trust is currently negotiating with a shortlist of institutional clients to offer them the opportunity to co-invest directly in data centers. For this investment, Actis seeks to raise a total of US$ 90 million, with contributions from investors from different parts of the world.

“It is a small list which includes two AFPs, two insurance companies and two of larger family offices because it is not a diversified investment, it is concentrated in China and that involves a certain capacity of analysis and that it is a qualified institutional investor, with a portfolio within which that investment makes sense”, says Gomien.

But at the same time, Actis is looking for investors for a real estate fund, which is going to invest in data centers and other residential assets in Asia. The capital to be raised in this vehicle is US$ 80 million and could reach US$ 105 million. While Frontal Trust does not have a third-party fund distribution business, in this case, it will play that role, as Actis’s strategic partner.

The investment has a duration of five years and the expected returns are 30% per year. In terms of multiples, Actis aspires to allow investors to receive a multiple of three times the capital invested.

 

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