How The Rise of AI is Fuelling Data Centre M&A Rush
The data centre industry witnessed its most transformative year on record in 2024, with mergers and acquisitions reaching US$73bn in closed deals – topping the previous peak of US$52bn from just two years earlier.
Traditional data centres, built for predictable enterprise workloads, now face demands from AI applications that consume exponentially more power and generate heat levels that pose challenges for conventional cooling systems. The result has been a feeding frenzy among private equity firms and strategic acquirers seeking facilities that can handle tomorrow’s computational demands.
With the data centre industry seeing constant growth, the momentum shows no signs of abating. Early 2025 saw over US$7bn in completed transactions, with another US$15bn in agreed deals awaiting closure.
AI workloads shatter traditional data centre assumptions
The arrival of generative AI has fundamentally altered data centre operations. Where conventional servers might draw 5-10 kilowatts per rack, AI workloads powered by GPUs can demand 50-100 kilowatts or more.
“AI is driving a lot of changes as it requires high-performance CPUs and GPUs, which generate a lot of heat. The data centre industry is mostly on air cooling design, which can cool up to only 50 kilowatts, but that is not enough for high-performance CPUs and GPUs required by AI,” explains Sung Kim, Global Head of Data Centre Liquid Cooling Solutions at Castrol.
The scale of this transformation becomes clear in the hyperscalers’ spending commitments. Microsoft has allocated US$80bn specifically for AI data centres and cloud capacity, while Meta raised its 2025 capital expenditure guidance to between US$64bn and US$72bn: a 73.5% increase over 2024 levels.
Goldman Sachs, meanwhile, projects that data centre power consumption will increase 160% by 2030, driven primarily by AI workloads.
The technological arms race creates a powerful incentive for acquisition over development. AI hardware, and particularly the GPU chips that power today’s most powerful LLMs, has evolved at an unprecedented pace in recent years. A facility designed around today’s state-of-the-art processors may require extensive and costly retrofitting within two years to accommodate next-generation hardware with different power and thermal profiles. Acquiring operational facilities, therefore, provides not just immediate capacity but access to engineering teams experienced in managing rapid technology transitions and complex cooling architectures.
- $73bn - Record value of closed data centre M&A deals in 2024.
- 160% - Projected increase in data centre power consumption by 2030, driven primarily by AI.
- 90% - The estimated market share of data centre acquisitions held by private equity firms.
Private equity establishes market dominance with 80-90% share
It’s for this reason that private equity firms have evolved from occasional participants to data centre market kingmakers. The data centre sector offers a rare combination of utility-like stability and technology-driven growth that appeals to institutional investors.
“Specialist data centre operators have either not been able or were not prepared to fund those investments themselves, while private equity investors have been more than willing to step in and fund growth initiatives,” notes John Dinsdale, Chief Analyst at Synergy Research Group. Data centres are “very much being viewed as long-term safe havens for investments, even during turbulent times, which has caused a huge influx in private equity,” he notes.
PE forays into data centres have been increasingly frequent in recent months. Blackstone’s consortium shattered industry records with its US$16bn acquisition of Asia-Pacific hyperscale operator AirTrunk in late 2024, following a series of multi-billion-dollar take-private deals targeting established US operators including CyrusOne (acquired by KKR), Switch and CoreSite, as private equity firms systematically consolidated the industry’s leading platforms.
DAMAC Digital: Building a global platform through strategic M&A
Beyond private equity, the transformation of Dubai real estate giant DAMAC’s digital infrastructure division highlights how ambitious new entrants are reshaping the competitive landscape. Originally launched as EDGNEX, the division recently rebranded to DAMAC Digital as part of its evolution into a standalone digital infrastructure powerhouse with global ambitions that extend far beyond its Middle Eastern origins.
DAMAC Digital’s strategy reflects the new mathematics of data centre competition: scale, geographic diversification and power security. The company has revealed targets total capacity exceeding 3,000 megawatts with over 300 megawatts operational by 2026, backed by a US$3bn investment pipeline.
The company is pursuing simultaneous development across three continents: EMEA operations spanning Spain, Greece, Turkey and Saudi Arabia, APAC expansion into Thailand and Indonesia and a planned US$20bn investment programme to establish operations in the United States.
Its April 2025 acquisition of Finland-based Hyperco is a prime example of this strategy. The company identified and acquired a local operator with established relationships, operational expertise and secured power allocations in two of Europe’s most energy-abundant markets.
“This acquisition aligns with our vision to develop strong partnerships, invest and build scalable, world-class digital infrastructure,” shared Hussain Sajwani, Founder of DAMAC Group.
“Hyperco brings a great team, deep market expertise and a shared commitment to innovation, which will drive our success in the region. We plan to build a significant future capacity in the Nordics and establish a strong foothold in the market.”
Integrating AI readiness with sustainability
DAMAC Digital’s 40-megawatt Madrid campus, acquired from ActivumSG for 2026 operations, targets both hyperscalers and enterprises.
“DAMAC is strategically positioning itself in the European market by developing state-of-the-art data centres that meet the rigorous, high-capacity needs of major hyperscalers,” Tarun Tyagi, Senior Vice President of DAMAC Properties, told Data Centre Magazine. “Our facilities are designed to provide the scalability, reliability and security that hyperscalers require, with an emphasis on adopting the latest in energy-efficient technologies and network architectures.”
Strategic location considerations extend beyond traditional connectivity metrics to encompass energy security and sustainability mandates. “Spain’s commitment to renewable energy, with 60% of its power sourced from renewables, aligns seamlessly with our sustainability goals,” Tarun explains. “Strategically located just five kilometres from an Internet Exchange and 10 kilometres from the airport, the Madrid facility boasts exceptional connectivity and infrastructure.”
Sustainability integration represents core operational philosophy rather than regulatory compliance. "Sustainability is at the heart of our data centre development and operations," confirms Tarun. "We are committed to integrating renewable energy sources and deploying energy-efficient technologies to minimise environmental impact." The company's Adiabatic Cooling System implementation in Riyadh demonstrates tangible results, reducing ambient temperature around air-cooled chillers from 48°C to below 37°C year-round and achieving 21% energy consumption reduction while optimising water usage efficiency to 0.3 through effective recirculation.
New DAMAC Digital facilities incorporate High-Performance Computing and AI capabilities from initial design phases. "Our new data centres are set to play a pivotal role in supporting HPC and AI-driven applications across the EMEA region," explains Tarun. "By providing high-density computing environments, enhanced by energy-efficient cooling systems and robust direct-connect networking capabilities, these facilities are equipped to handle the intense workloads that HPC and AI require."
M&A activity set to continue through 2025-2026
Current M&A activity represents structural industry change rather than cyclical growth, with AI demand, private equity capital and power constraints favouring consolidation over organic development.
"Data centres are being viewed as long-term safe havens for investments, even during turbulent times."
The technology sector supports continued data centre consolidation, according to PwC’s 2025 mid-year TMT M&A outlook.
“Many of the themes we outlined in our 2025 outlook – such as software, big tech capital expenditures, telecom portfolio optimisation, proliferation of new media channels, focus on data centres and, of course, beneficiaries of the AI boom (such as semiconductors) – are expected to continue to drive M&A over the remainder of the year,” note authors Barry Jaber and Bart Spiegel. “While geopolitical uncertainty and the unknown trajectory of tariffs and protectionist trade policies have the potential to restrict the flow of deals, savvy dealmakers should approach the remainder of 2025 and into 2026 with a disciplined but opportunistic mindset to capitalise on M&A opportunities.”
